Rule 6: Kinds of Pleadings To refute the claims of respondents, petitioners maintained in their Answer with

Compulsory Counterclaim that it would be highly preposterous for them to

G.R. No. 189532 June 11, 2014
VIRGINIA S. DIO and H.S. EQUITIES, LTD., Petitioners,
vs.
SUBIC BAY MARINE EXPLORATORIUM, INC., represented by its Chairman
and Chief Executive Officer, TIMOTHY DESMOND, Respondents.
Petition: This is a Petition for Review on Certiorari pursuant to Rule 45 of the
Revised Rules of Court, assailing the Order of the Regional Trial Court (RTC) of
Balanga City, Bataan, on pure question of law.
Facts:
Petitioner H.S. Equities, Ltd., (HSE) is a foreign corporation duly organized and
existing under the laws of the British Virgin Islands. It entered into an isolated
transaction subject of the instant case. It is represented in this action by
petitioner Virginia S. Dio (Dio).
Respondent Subic Bay Marine Exploratorium, Inc. (SBME) is a domestic
corporation, duly organized and existing under the Philippine laws and is
represented in this action by its Chief Executive Officer, respondent Timothy
Desmond (Desmond).
In 2002, SBME decided to expand its business by operating a beach resort. For
the business venture to take off, SBME needed to solicit investors. HSE thru its
authorized director, Dio, agreed to invest the amount of US$2,500,000.00 with
SBME by purchasing common shares. The agreement was reduced into writing
wherein HSE, in order to protect its interest in the company, was afforded the
right to appoint a member of the board of directors and the right to veto certain
board resolutions. After HSE initially paid US$200,000.00 for its subscription, it
refused to further lay out money for the expansion project of the SBME due to the
alleged mismanagement in the handling of corporate funds.
Consequently, SBME initiated an intra-corporate dispute before the RTC of
Balanga City, Bataan against petitioners HSE and Dio. SBME essentially alleged
that HSE unjustly refused to pay the balance of its unpaid subscription effectively
jeopardizing the company’s expansion project. Apart from their refusal to honor
their obligation under the subscription contract, it was further alleged by SBME
that Dio tried to dissuade local investors and financial institutions from putting
in capital to SBME by imputing defamatory acts against Desmond. To protect the
interest of the corporation and its stockholders, SBME sought that petitioners be
enjoined from committing acts inimical to the interest of the company.
dissuade investors and banks from putting in money to SBME considering that
HSE and Dio are stakeholders of the company with substantial investments
therein. In turn, petitioners countered that their reputation and good name in the
business community were tarnished as a result of the filing of the instant
complaint, and thus prayed that they be indemnified for moral damages and
litigation expenses. Petitioners likewise sought to recover their investment of
US$1,500,000.00 since they were purportedly inveigled by Desmond into putting
in money to SBME under the pretext that they will be accorded with minority
protection rights.
After petitioners filed their Answer with Compulsory Counterclaim, the RTC,
instead of setting the case for pre-trial, motu proprio dismissed the case. The
dismissal was grounded on the defective certificate of non-forum shopping which
was signed by Desmond without specific authority from the Board of Directors of
SBME.
Armed with a board resolution specifically authorizing Desmond to sign the
certificate of non-forum shopping on behalf of SBME, respondents moved that the
case be reinstated. For lack of merit, RTC denied respondents’ motion and
affirmed the dismissal.
Aggrieved, respondents elevated the matter before the Court of Appeals. For
failure of the respondents to file their appellants’ brief, the appellate court
proceeded to dismiss the case and considered it closed and terminated.
After respondents failed to seasonably move for the reconsideration of the
aforementioned Resolution, the dismissal became final and executory.
The procedural incidents before the appellate court having been resolved with
finality, petitioners went back to the RTC to file a motion to set their
counterclaims for hearing which was opposed by the respondents on the ground
that the filing of the compulsory counterclaims was not accompanied by payment
of the required docket fees precluding the court from acquiring jurisdiction over
the case.
Acting on the motions filed by the opposing parties, the RTC granted the motion
to dismiss but not on the ground of non-payment of docket fees. In disallowing
petitioners’ counterclaims to proceed independently of respondents’ complaint,
the lower court pointed out that in view of the dismissal of the main case,
which has already been affirmed with finality by the appellate court, it has
already lost its jurisdiction to act on petitioners’ counterclaim, the
compulsory counterclaim being merely ancillary to the principal controversy.
Thus, petitioners filed this instant Petition for Review on Certiorari on pure
question of law seeking the reversal of the RTC Orders.
Issue: Whether or not the dismissal of the complaint carries with it the dismissal
of the counterclaim
Ruling: No.
In the significant case of Pinga v. Heirs of German Santiago, this Court speaking
through Justice Dante Tinga, resolved the nagging question as to whether or not
the dismissal of the complaint carries with it the dismissal of the counterclaim.
Putting to rest the remaining confusion occasioned by Metals Engineering
Resources Corp. v. Court of Appeals24 and BA Finance Corporation v. Co,25 the
Court articulated that, in light of the effectivity of the 1997 Rules of Civil
Procedure, the correct and prevailing doctrine is as follows:
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure,
including the amended Rule17, those previous jural doctrines that were
inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure
were implicitly abandoned insofar as incidents arising after the effectivity of the
new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a
counterclaim may be necessarily dismissed along with the complaint, clearly
conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA Finance
as doctrine extends as far back as 1997, when the Court adopted the new Rules
of Civil Procedure. If, since then, such abandonment has not been affirmed in
jurisprudence, it is only because no proper case has arisen that would warrant
express confirmation of the new rule. That opportunity is here and now, and we
thus rule that the dismissal of a complaint due to fault of the plaintiff is
without prejudice to the right of the defendant to prosecute any pending
counterclaims of whatever nature in the same or separate action. We
confirm that BA Finance and all previous rulings of the Court that are inconsistent
with this present holding are now abandoned.
As the rule now stands, the nature of the counterclaim notwithstanding, the
dismissal of the complaint does not ipso jure result in the dismissal of the
counterclaim, and the latter may remain for independent adjudication of the
court, provided that such counterclaim, states a sufficient cause of action and
does not labor under any infirmity that may warrant its outright dismissal. Stated
differently, the jurisdiction of the court over the counterclaim that appears
to be valid on its face, including the grant of any relief thereunder, is not
abated by the dismissal of the main action. The court’s authority to proceed
with the disposition of the counterclaim independent of the main action is
premised on the fact that the counterclaim, on its own, raises a novel question
which may be aptly adjudicated by the court based on its own merits and
evidentiary support.
In Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporartion, 29 a case on all
fours with the present one, we expounded our ruling in Pinga and pointed out
that the dismissal of the counterclaim due to the fault of the plaintiff is without
prejudice to the right of the defendant to prosecute any pending counterclaims
of whatever nature in the same or separate action, thus: Based on the aforequoted
ruling of the Court, if the dismissal of the complaint somehow eliminates the
cause of the counterclaim, then the counterclaim cannot survive.
Conversely, if the counterclaim itself states sufficient cause of action then it
should stand independently of and survive the dismissal of the complaint.
Now, having been directly confronted with the problem of whether the
compulsory counterclaim by reason of the unfounded suit may prosper
even if the main complaint had been dismissed, we rule in the affirmative.
It bears to emphasize that petitioner's counterclaim against respondent is for
damages and attorney's fees arising from the unfounded suit. While respondent's
Complaint against petitioner is already dismissed, petitioner may have very well
already incurred damages and litigation expenses such as attorney's fees since it
was forced to engage legal representation in the Philippines to protect its rights
and to assert lack of jurisdiction of the courts over its person by virtue of the
improper service of summons upon it. Hence, the cause of action of petitioner's
counterclaim is not eliminated by the mere dismissal of respondent's complaint.
Once more, we allow the counterclaim of the petitioners to proceed
independently of the complaint of the respondents.
WHEREFORE, premises considered, the petition is GRANTED. The assailed R TC
Orders dated 3 April 2009 and 26 August 2009 are hereby REVERSED and SET
ASIDE. The case is REMANDED to the Regional Trial Court of Balanga City, Bataan
for further proceedings, on the matter of petitioners Virginia S. Dio and H.S.
Equities, Ltd. 's counterclaims. No pronouncement as to costs.
G.R. No. 207376 August 6, 2014
AIDA PADILLA, Petitioner,
vs.
GLOBE ASIATIQUE REALTY HOLDINGS CORPORATION, FILMAL REALTY
CORPORATION, DELFIN S. LEE and DEXTER L. LEE, Respondents.
Petition: Petition for review under Rule 45
Facts:
Philippine National Bank (PNB) entered into several Contracts to Sell (CTS)
Facility Agreements with respondents Globe Asiatique Realty Holdings
Corporation (Globe Asiatique) and Filmal Realty Corporation (Filmal)
represented by Delfin S. Lee and Dexter L. Lee, President and Vice-President,
respectively, of the two corporations. Pursuant to and as a condition for the CTS
Facility availments, respondents executed in favor of PNB several Deeds of
Assignment.
Respondents defaulted in the payment of their outstanding balance, for which
PNB made a formal and final demand upon respondents to pay/settle their
outstanding obligation. In the course of credit monitoring and verification, PNB
claimed it discovered 231 out of 240 Contracts to Sell to have either inexistent
addresses of buyers or the names of the buyers are non-existent or both.
Thereafter, PNB instituted Civil Case for recovery of sum of money and damages
with prayer for writ of preliminary attachment before the RTC of Pasay City.
In their complaint, PNB alleged that respondents falsely represented that they
have valid and subsisting contracts to sell, which evidently showed they had no
intention to pay their loan obligations.
Defendants Globe Asiatique and Filmal also filed their Answer with Counterclaim
denying PNB’s allegations of fraud and misrepresentation particularly after PNB
had accepted payments from the corporations. They further assailed the affidavit
executed by Aida Padilla who they claimed has no personal knowledge of the
subject transactions and there being no allegation of threat or possibility that
defendant corporations will dispose of their properties in fraud of their creditors.
The Pasay City RTC denied defendants’ motion to dismiss.
Meanwhile, in their Complaint filed against Judge Pedro De Leon Gutierrez and
Aida Padilla (both sued in their personal capacity), respondents claimed that
Globe Asiatique and Filmal are well-known and successful real estate developers
whose projects were "being continuously supported by various banks and other
financial institutions prior to the malicious and devastating unfounded civil
action" filed by AidaPadilla (petitioner) which wrought havoc to their businesses
and lives. Respondents sought to hold Judge Gutierrez personally liable for
issuing the writ of preliminary attachment in favor of PNB.
Respondents thus prayed for a judgment ordering petitioner and Judge Gutierrez
to pay moral damages, exemplary damages, litigation expenses, attorney’s fees
and cost of suit.
Judge Gutierrez moved to dismiss the complaint against him while petitioner
filed her Answer With Compulsory Counterclaims, praying for the dismissal
of respondents’ complaint on the following grounds: (1) submission of a false
certification of non-forum shopping by respondents; (2) litis pendentia; (3)
respondents’ failure to attach the alleged actionable document, i.e.the supposed
"new term loan", inviolation of Section 7, Rule 8 of the Rules of Court; (4) failure
to state a cause of action against petitioner; and (5) petitioner cannot be held
personally liable for her official acts done for and in behalf of PNB.
The RTC of Pasig City dismissed the case of respondents claiming damages from
petitioner for lack of jurisdiction. A motion for reconsideration was filed but it
was denied. Petitioner on the other hand, filed a Motion to Set Counterclaims for
Pre-Trial Conference. However, it was denied. Hence, the petitioner came directly
to this Court.
Issue: Whether or not a court can take cognizance of a compulsory counterclaim
despite the fact that the corresponding complaint was dismissed for lack of
jurisdiction.
Ruling: Yes.
SEC. 7. Compulsory counterclaim.– A compulsory counterclaim is one which,
being cognizable by the regular courts of justice, arises out of or is connected with
the transaction or occurrence constituting 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. Such a counterclaim must
be within the jurisdiction of the court both as to the amount and the nature
thereof, except that in an original action before the Regional Trial Court, the
counterclaim may be considered compulsory regardless of the amount.
Under the 1997 Rules of Civil Procedure, it is now explicitly provided that the
dismissal of the complaint due to failure of the plaintiff to prosecute his case is
"without prejudice to the right of the defendant to prosecute his counterclaim in
the same or in a separate action."
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure,
including the amended Rule 17, those previous jural doctrines that were
inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure
were implicitly abandoned insofar as incidents arising after the effectivity of the
new procedural rules on 1 July 1997. Subsequently, in Perkin Elmer Singapore
Pte Ltd. v. Dakila Trading Corporation37 this Court held that while the declaration
in Pinga refers to instances covered by Section 3, Rule 17 on dismissal of
complaints due to the fault of plaintiff, it does not preclude the application of the
same rule when the dismissal was upon the instance of defendant who correctly
argued lack of jurisdiction over its person. Further, in stark departure from
Metals Engineering, we declared that the court’s jurisdiction over respondent’s
complaint is not to be confused with jurisdiction over petitioner’s counterclaim,
Still anchored on the pronouncement in Pinga, we then categorically ruled that a
counterclaim arising from the unfounded suit may proceed despite the
dismissal of the complaint for lack of jurisdiction over the person of
defendant-counterclaimant.
It bears to emphasize that petitioner’s counterclaim against respondent is for
damages and attorney’s fees arising from the unfounded suit. While respondent’s
Complaint against petitioner is already dismissed, petitioner may have very well
already incurred damages and litigation expenses such as attorney’s fees since it
was forced to engage legal representation in the Philippines to protect its rights
and to assert lack of jurisdiction of the courts over its person by virtue of the
improper service of summons upon it. Hence, the cause of action of petitioner’s
counterclaim is not eliminated by the mere dismissal of respondent’s
complaint.
In the present case, the RTC of Pasig City should have allowed petitioner’s
counterclaim to proceed notwithstanding the dismissal of respondents’
complaint, the same being compulsory in nature and with its cause not eliminated
by such dismissal. The Pasig City RTC clearly erred in refusing to hear the
counterclaims upon the same ground for dismissal of the complaint, i.e., lack of
jurisdiction in strict observance of the policy against interference with the
proceedings of a co-equal court.
Ironically, while it is the respondents who erroneously and maliciously asked the
Pasig City RTC to pass upon these issues still pending in a co-equal court, for
which reason the said court dismissed their complaint, petitioner was not
allowed to prove her counterclaim by reason of the unfounded suit in the same
case as purportedly it will entail verifying respondents’ claim that they were
prejudiced by the orders and processes in the Pasay City RTC. This situation
exemplifies the rationale in Perkin Elmer Singapore Pte Ltd. 42 on requiring the
petitioner to make the counterclaim in the present action, under threat of losing
such right to claim the same ever again any other court, yet make such right of
the petitioner totally dependent on the fate of the respondents’ complaint.
WHEREFORE, the petition is GRANTED. The Orders dated November 12, 2012
and May 8, 2013 of the Regional Trial Court of Pasig City, Branch 155 in Civil Case
No. 73132 are hereby REVERSED and SET ASIDE. Said court is hereby directed to
proceed with the presentation of evidence in support of the compulsory
counterclaim of petitioner Aida Padilla.
G.R. No. 197380 October 8, 2014
ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact, NYMPHA Z.
SALES, Petitioners,
vs.
MARIA DIVINA GRACIA SANTOS-GRAN** and REGISTER OF DEEDS OF
MARIKINA CITY, Respondents.
Petition: Before the Court is a petition for review on certiorari
Facts:
Petitioner Eliza Zuñiga-Santos (petitioner), filed a Complaint for annulment of
sale and revocation of title against respondents Maria Divina Gracia Santos-Gran
(Gran) and the Register of Deeds of Marikina City before the RTC. The said
complaint was later amended (Amended Complaint).
In her Amended Complaint, petitioner alleged, among others, that: (a) she was
the registered owner of three (3) parcels of land located in the province of Rizal
(subject properties) prior to their transfer in the name of private respondent
Gran; (b) she has a second husband by the name of Lamberto C. Santos
(Lamberto), with whom she did not have any children; (c) she was forced to take
care of Lamberto’s alleged daughter, Gran, whose birth certificate was forged to
make it appear that the latter was petitioner’s daughter; (d) pursuant to void and
voidable documents, i.e., a Deed of Sale, Lamberto succeeded in transferring the
subject properties in favor of and in the name of Gran; (e) despite diligent efforts,
said Deed of Sale could not be located; and (f) she discovered that the subject
properties were transferred to Gran sometime in November 2005. Accordingly,
petitioner prayed, inter alia, that Gran surrender to her the subject properties
and pay damages, including costs of suit.
For her part, Gran filed a Motion to Dismiss, contending, inter alia, that (a) the
action filed by petitioner had prescribed since an action upon a written contract
must be brought within ten (10) years from the time the cause of action accrues,
or in this case, from the time of registration of the questioned documents before
the Registry of Deeds;14 and (b) the Amended Complaint failed to state a cause of
action as the void and voidable documents sought to be nullified were not
properly identified nor the substance thereof set forth, thus, precluding the RTC
from rendering a valid judgment in accordance with the prayer to surrender the
subject properties.
The RTC granted Gran’s motion and dismissed the Amended Complaint for its
failure to state a cause of action, considering that the deed of sale sought to be
nullified was not attached. It likewise held that the certificates of title covering
the subject properties cannot be collaterally attacked and that the action had
already prescribed under Article 1144 of the Civil Code.
Dissatisfied, petitioner elevated the matter to the CA.
The CA sustained the dismissal of petitioner’s Amended Complaint but on the
ground of insufficiency of factual basis. The CA likewise ruled that the action has
not yet prescribed since an action for nullity of void deeds of conveyance is
imprescriptible. Nonetheless, it held that since the Deed of Sale sought to be
annulled was not attached to the Amended Complaint, it was impossible for the
court to determine whether petitioner’s signature therein was a forgery and thus,
would have no basis to order the surrender or reconveyance of the subject
properties.
Aggrieved, petitioner moved for reconsideration and attached, for the first time,
a copy of the questioned Deed of Sale which she claimed to have recently
recovered, praying that the order of dismissal be set aside and the case be
remanded to the RTC for further proceedings.
The CA denied petitioner’s motion and held that the admission of the contested
Deed of Sale at this late stage would be contrary to Gran’s right to due process.
Hence, the instant petition.
Issue: whether or not the dismissal of petitioner’s Amended Complaint should be
sustained
Ruling: Yes.
A complaint states a cause of action if it sufficiently avers the existence of the
three (3) essential elements of a cause of action, namely: (a) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (b)
an obligation on the part of the named defendant to respect or not to violate such
right; and (c) an act or omission on the part of the named defendant violative of
the right of the plaintiff or constituting a breach of the obligation of defendant to
the plaintiff for which the latter may maintain an action for recovery of
damages. If the allegations of the complaint do not state the concurrence of these
elements, the complaint becomes vulnerable to a motion to dismiss on the ground
of failure to state a cause of action.
It is well to point out that the plaintiff’s cause of action should not merely be
"stated" but, importantly, the statement thereof should be "sufficient." This is
why the elementary test in a motion to dismiss on such ground is whether or not
the complaint alleges facts which if true would justify the relief demanded. As a
corollary, it has been held that only ultimate facts and not legal conclusions or
evidentiary facts are considered for purposes of applying the test. This is
consistent with Section 1, Rule 8 of the Rules of Court which states that the
complaint need only allege the ultimate facts or the essential facts constituting
the plaintiff’s cause of action. A fact is essential if they cannot be stricken out
without leaving the statement of the cause of action inadequate. Since the inquiry
is into the sufficiency, not the veracity, of the material allegations, it follows that
the analysis should be confined to the four corners of the complaint, and no other.
A judicious examination of petitioner’s Amended Complaint readily shows
its failure to sufficiently state a cause of action. Contrary to the findings of the
CA, the allegations therein do not proffer ultimate facts which would warrant an
action for nullification of the sale and recovery of the properties in controversy,
hence, rendering the same dismissible.
While the Amended Complaint does allege that petitioner was the registered
owner of the subject properties in dispute, nothing in the said pleading or its
annexes would show the basis of that assertion, either through
statements/documents tracing the root of petitioner’s title or copies of previous
certificates of title registered in her name. Instead, the certificates of title
covering the said properties that were attached to the Amended Complaint are in
the name of Gran. At best, the attached copies of TCT Nos. N-5500 and N-4234
only mention petitioner as the representative of Gran at the time of the covered
property’s registration when she was a minor. Nothing in the pleading, however,
indicates that the former had become any of the properties’ owner. This leads to
the logical conclusion that her right to the properties in question – at least
through the manner in which it was alleged in the Amended Complaint – remains
ostensibly unfounded.
Aside from the insufficiency of petitioner’s allegations with respect to her right
to the subject properties sought to be recovered, the ultimate facts supposedly
justifying the "annulment of sale," by which the reconveyance of the subject
properties is sought, were also insufficiently pleaded.
Hence, by merely stating a legal conclusion, the Amended Complaint presented
no sufficient allegation upon which the Court could grant the relief petitioner
prayed for. Thus, said pleading should be dismissed on the ground of failure to
state cause of action, as correctly held by the RTC.
That a copy of the Deed of Sale adverted to in the Amended Complaint was
subsequently submitted by petitioner does not warrant a different course of
action. The submission of that document was made, as it was purportedly
"recently recovered," only on reconsideration before the CA which, nonetheless,
ruled against the remand of the case. An examination of the present petition,
however, reveals no counter-argument against the foregoing actions; hence, the
Court considers any objection thereto as waived.
In any event, the Court finds the Amended Complaint’s dismissal to be in order
considering that petitioner’s cause of action had already prescribed.
To determine when the prescriptive period commenced in an action for
reconveyance, the plaintiff’s possession of the disputed property is material. If
there is an actual need to reconvey the property as when the plaintiff is not in
possession, the action for reconveyance based on implied trust prescribes in ten
(10) years, the reference point being the date of registration of the deed or the
issuance of the title. On the other hand, if the real owner of the property remains
in possession of the property, the prescriptive period to recover titleand
possession of the property does not run against him and in such case,the action
for reconveyance would be in the nature of a suit for quieting of title which is
imprescriptible.41
In the case at bar, a reading of the allegations of the Amended Complaint failed to
show that petitioner remained in possession of the subject properties in dispute.
On the contrary, it can be reasonably deduced that it was Gran who was in
possession of the subject properties.
WHEREFORE, the petition is DENIED. The Decision dated January 10, 2011 and
the Resolution dated June 22, 2011 of the Court of Appeals in CA-G.R. CV No.
87849 are hereby AFFIRMEDwith MODIFICATION in that the Amended
Complaint be dismissed on the grounds of (a) failure to state a cause of action,
and (b) prescription as herein discussed.
G.R. No. 195728 April 19, 2016
PARAMOUNT LIFE & GENERAL INSURANCE CORPORATION, Petitioner,
vs.
CHERRY T. CASTRO and GLENN ANTHONY T. CASTRO, Respondents.
x-----------------------x
G.R. No. 211329
CHERRY T. CASTRO and GLENN ANTHONY T. CASTRO, Petitioners,
vs.
PARAMOUNT LIFE & GENERAL INSURANCE CORPORATION, Respondent
Petition: Petitions for Review on Certiorari under Rule 45 of the Rules of Court
Facts:
In 2004, the PPSBI applied for and obtained insurance from Paramount, which
accordingly issued Group Master Policy effective 1 September 2004. Under
Section 20, Article IV of the said policy, "all death benefits shall be payable to the
creditor, PPSBI, as its interest may appeal."
Meanwhile, Virgilio J. Castro (Virgilio) - Cherry's husband and Glenn's father -
obtained a housing loan from the PPSBI. PPSBI required Virgilio to apply for a
mortgage redemption insurance (MRI) from Paramount to cover the loan. In his
application for the said insurance policy, Virgilio named Cherry and Glenn as
beneficiaries. 16 Paramount issued a certificate in his favor, subject to the terms
and conditions of Group Master Policy.
On 26 February 2009, Virgilio died of septic shock. Consequently, a claim was
filed for death benefits under the individual insurance coverage issued under the
group policy. Paramount however denied the claim, on the ground of the failure
of Virgilio to disclose material information, or material concealment or
misrepresentation. It said that when Virgilio submitted his insurance application,
he made some material misrepresentations by answering "no" to questions on
whether he had any adverse health history and whether he had sought medical
advice or consultation concerning it. Because of the alleged material concealment
or misrepresentation, it declared Virgilio's individual insurance certificate (No.
041913) rescinded, null, and absolutely void from the very beginning.22
Paramount filed a Complaint with the RTC. It prayed that Application and
Insurance Certificate covering the individual insurance of Virgilio be declared
null and void by reason of material concealment and misrepresentation. It also
prayed for attorney's fees and exemplary damages.
In their Answer with Counterclaim, the Castro’s argued that Virgilio had not
made any material misrepresentation. They further argued that by approving
Virgilio's application, Paramount was estopped from raising the supposed
misrepresentations. The Castro’s made a counterclaim for actual and exemplary
damages, as well as attorney's fees, for the alleged breach of contract by
Paramount arising from its refusal to honor its obligation as insurer.
G.R. No. 195728
On 29 October 2009, the Castros filed a motion to include the PPSBI as an
indispensable party-defendant. The RTC thereafter denied the motion, reasoning
that Paramount's Complaint could be fully resolved without the PPSBI's
participation.
Consequently, the Castro’s filed a Motion for Leave to File a Third Party-
Complaint and to Admit Attached Third-Party Complaint. This motion was
likewise denied. The Castro’s Motion for Reconsideration was again denied in a
Resolution.
Aggrieved, the Castro’s assailed the RTC Resolutions through a Petition for
Certiorari filed with the CA. They likewise subsequently filed a Motion for Leave
of Court to File and to Admit Attached Supplemental Petition for Review.
In its Decision, the CA partially granted the Petition by allowing a third-party
complaint to be filed against the PPSBI. It ruled that the Castro’s were freed from
the obligation to pay the bank by virtue of subrogation, as the latter would collect
the loan amount pursuant to the MRI issued by Paramount in Virgilio's
favor. Paramount moved for reconsideration, but the CA denied the motion
through a Resolution.
Paramount filed a Petition for Review under Rule 45, arguing that the case could
be fully appreciated and resolved without involving the PPSBI as a third-party
defendant.
policy) in the validity of the individual insurance certificates issued by
Paramount. The PPSBI need not institute a separate case, considering that its
cause of action is intimately related to that of Paramount as against the Castro’s.
The soundness of admitting a third-party complaint hinges on causal
connection between the claim of the plaintiff in his complaint and a claim
for contribution, indemnity or other relief of the defendant against the
third-party defendant. In this case, the Castro’s stand to incur a bad debt to the
PPSBI - the exact event that is insured against by Group Master Policy No. G-086
- in the event that Paramount succeeds in nullifying Virgilio's Individual
Insurance Certificate.

ISSUES: Whether the CA erred in remanding the case to the R TC for the
admission of the Third-Party Complaint against PPSBI
RULING: Yes.
Paramount further argues that the propriety of a third-party complaint rests on
whether the possible third-party defendant (in this case PPSBI) can raise the
same defenses that the third-party plaintiffs (the Castro’s) have against the
plaintiff. However, the Rules do not limit the third-party defendant's options to
such a condition. Thus:

The Castro’s sought to implead the PPSBI as a third-party defendant in the

Section 13. Answer to third (fourth, etc.)-party complaint. – A third (fourth, etc.)-
nullification case instituted by Paramount. They theorized that by virtue of the
party defendant may allege in his answer his defenses, counterclaims or cross-
death of Virgilio and the mandate of the group insurance policy in relation to his
claims, including such defenses that the third (fourth, etc.)-party plaintiff may
individual insurance policy, the PPSBI stepped into the shoes of Cherry and
have against the original plaintiffs claim. In proper cases, he may also assert a
Glenn. According to the Castro’s, upon Virgilio's death, the obligation to pay the
counterclaim against the original plaintiff in respect of the latter's claim against
third-party defendant (PPSBI) passed on to Paramount by virtue of the Mortgage
the third-party plaintiff. 49
Redemption Insurance, and not to them as Virgilio's heirs.
As seen above, the same defenses the third-party plaintiff has against the original
In this case, the PPSBI, as the mortgagee-bank, required Virgilio to obtain an MRI
plaintiff are just some of the allegations a third-party defendant may raise in its
from Paramount to cover his housing loan. Paramount undertook to pay the
answer. Section 13 even gives the third-party defendant the prerogative to raise
PPSBI. Paramount, in opposing the PPSBI's inclusion as a third-party defendant,
a counterclaim against the original plaintiff in respect of the latter's original claim
reasons that it is only seeking the nullification of Virgilio's individual insurance
against the defendant/third-party plaintiff.
certificate, and not the group insurance policy forged between it and the PPSBI.
It concludes that the nullification action it filed has nothing to do with the PPSBI.
The CA correctly ruled that to admit the Castro’s Third-Party Complaint, in which
they can assert against the PPSBI an independent claim they would otherwise
We disagree. Should Paramount succeed in having the individual insurance
assert in another action, would prevent multiplicity of suits. Considering also that
certificate nullified, the PPSBI shall then proceed against the Castro’s. This would
the original case from which these. Present Petitions arose has not yet been
contradict the provisions of the group insurance policy that ensure the direct
resolved, the Court deems it proper to have all the parties air all their possible
payment by the insurer to the bank:
grievances in the original case still pending with the RTC.

Notwithstanding the provision on Section 22 "No Assignment" of Article IV

WHEREFORE, premises considered, the Petitions in G.R. Nos. 195728 and
Benefit Provisions, and in accordance with provisions of Section 6 "Amendment
211329 are DENIED.
of this Policy" under Article II General Provisions of the Group Policy, it is hereby
agreed that all death benefits shall be payable to the Creditor, Philippine
Postal Savings Bank as its interest may appeal.47 (Emphasis supplied.)

In allowing the inclusion of the PPSBI as a third-party defendant, the Court

recognizes the inseparable interest of the bank (as policyholder of the group
Rule 7: Parts of a Pleading
G.R. No. 191225 October 13, 2014
ZARSONA MEDICAL CLINIC, Petitioner, vs.
PHILIPPINE HEALTH INSURANCE CORPORATION, Respondent.
Petition:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court, questioning the Resolutions of the Court of Appeals.
Facts:
A complaint was filed against petitioner Zarsona Medical Clinic (ZMC) for
violation of Section 149 of the Republic Act No. 7875 or the National Health
Insurance Act of 1995. Section 149 penalizes any health care provider that
increases the period of actual confinement of any patient with revocation of
accreditation.
ZMC filed a claim with the Philippine Health Insurance Corporation (Philhealth)
on the confinement of National Health Insurance Program (NHIP) member Lorna
M. Alestre (Alestre) on 10-12 August 2003. Said claim was denied on the ground
of "extended confinement." It was stated on the claim form that Alestre was
admitted to ZMC on 6 August 2003 and was discharged on 12 August 2003. It was
also revealed in her Salaysay3 dated 12 January 2004 that Alestre’s actual
confinement at ZMC was on 10-11 August 2003. Alestre, who is a teacher at Rizal
Elementary School, was found to have reported for work on 12 August 2003.
In defense of ZMC, Dr. Sylvia Bragat (Dr. Bragat), its Medical Director, stated that
ZMC’s Midwife/Clerk Jennifer R. Acuram (Acuram) committed an honest mistake
when she wrote 6-12 August 2003 as the confinement period in the claim form.
Dr. Bragat asserted that the hospital had in fact claimed only for two (2) days.
Acuram acknowledged her mistake in her Affidavit of Explanation.4
ZMC also presented an Affidavit of Explanation from Alestre recanting her
previous Salaysay. Alestre explained that the previous statement she gave does
not reflect the truth because she was protecting herself when she logged-in at the
school’s time record on 12 August 2003 when she was supposedly still confined
at ZMC. Alestre narrated that she and her son were admitted at ZMC on 10 August
2003 and was discharged on 12 August 2003. And that on 12 August 2003, she
managed to slip out of the hospital and report for work. She then went back to
ZMC to attend to her child and process her discharge papers. Dr. Ariel dela Cruz,
attending physician of Alestre, confirmed that the ordered Alestre’s discharge on
12 August 2003.6
The Philhealth Arbiter gave more evidentiary weight to the signature of Alestre
in the school’s attendance logbook which established the fact that she reported
for work on 12 August 2003.
ZMC was found liable for the charge of "Extending Period of Confinement" in
violation of R.A. No. 7875 and was meted the penalty of suspension from
participating in the NHIP for a period of three (3) months and a fine of
₱10,000.00.
ZMC appealed but the Philhealth Board of Directors (the Board) dismissed the
appeal and affirmed the Decision of the Philhealth Arbiter.
The Board noted that Alestre could not possibly be in ZMC and in the school at
the same time on 12 August 2003 while her son was still confined at the hospital.
ZMC filed a petition for review with the Court of Appeals putting in the forefront
of its arguments Alestre’s Affidavit of Explanation. ZMC admitted to Alestre’s
recantation but in its defense, ZMC emphasized that the Affidavit, being notarized
and executed under oath, should weigh more than the Salaysay, which was not
so.
Acting on the petition, the Court of Appeals directed the petitioner to RECTIFY
within five (5) days from notice, the following deficiencies in its petition: (1)
failure to attach the Special Power of Attorney executed by the petitioner Zarsona
Medical Clinicin favor of Ma. Irene M. Hao, authorizing the latter to execute the
verification and certification of nonforum shopping; (2) failure of the petitioner
to attach the certified true copy of the assailed decision of the Board of Directors
of the Philippine Health Insurance Corporation as required under Rule 43,
Section 6(c) of the Revised Rules of Court; (3) failure of the petitioner’s counsel,
Atty. John Tracy F. Cagas, to indicate the dates and places of issuance of his IBP
and PTR Receipts as well as his Roll of Attorneys Number.
Further action on the petition is held in abeyance pending the petitioner’s
compliance on these matters.8
ZMC filed its Compliance, but the he Court of Appeals dismissed the petition for
failure on the part of ZMC to attach a valid SPA. The appellate court found the SPA
defective on the ground that it does not explicitly authorize Dr. Bragat to sign and
execute the required verification and certification of nonforum shopping in this
case.
ZMC moved for reconsideration but it was denied for lack of merit. Hence, this
petition for review.
Issue: Whether the SPA is sufficient to authorize Dr. Bragat to sign the
verification and certification of non-forum shopping in the petition filed before
the Court of Appeals.
Ruling: Yes.
As to certification against forum shopping, non-compliance therewith or a
defect therein, unlike in verification, is generally not curable by its
subsequent submission or correction thereof, unless there is a need to relax
the Rule on the ground of "substantial compliance" or presence of "special
circumstances or compelling reasons."12 Rule 7, Section 5 of the Rules of the
Court, requires that the certification should be signed by the "petitioner or
principal party" himself. The rationale behind this is "because only the
petitioner himself has actual knowledge of whether or not he has initiated similar
actions or proceedings indifferent courts or agencies."13
In this case, Philhealth found the SPA defective. The defects in the SPA
notwithstanding, we rule in favor of ZMC. Time and again, we had espoused
the doctrine that provisions of the Rules of Court should be liberally
construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding. Otherwise put, the
rule requiring a certification of forum shopping to accompany every initiatory
pleading, or the verification for that matter "should not be interpreted with such
absolute literalness as to subvert its own ultimate and legitimate objective or the
goal of all rules of procedure – which is to achieve substantial justice as
expeditiously as possible."17 While it is true that the rules of procedure are
intended to promote rather than frustrate the ends of justice, and the swift
unclogging of court docket is a laudable objective, it nevertheless must not be met
at the expense of substantial justice. This Court has time and again reiterated the
doctrine that the rules of procedure are mere tools aimed at facilitating the
attainment of justice, rather than its frustration. A strict and rigid application of
the rules must always be eschewed when it would subvert the primary objective
of the rules, that is, to enhance fair trials and expedite justice. Technicalities
should never be used to defeat the substantive rights of the other party. Every
party-litigant must be affordedthe amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities. 18
We choose to apply liberality becauseof the substantial merit of the petition.
Based on the foregoing, we reverse the finding of Philhealth and hold that ZMC is
not guilty of extending the period of confinement.
WHEREFORE, the petition is GRANTED. The Resolution of the Court or Appeals
in CA-G.R. SP No. 02489-MIN dismissing the petition is REVERSED and SET
ASIDE. Philhcalth Board Resolution No. 1151, Series or 2008 is SET ASIDE.
G.R. No. 157867 December 15, 2009
METROPOLITAN BANK & TRUST COMPANY, Petitioner, vs.
HON. SALVADOR ABAD SANTOS, Presiding Judge, RTC, Br. 65,, Respondent
Petition:
This petition for review on certiorari, seeks to reverse and set aside the decision
and subsequent ruling on motion for reconsideration of the Court of Appeals
Facts:
Respondent Manfred Jacob De Koning (De Koning) obtained a loan from
Metrobank. To secure the payment of this loan, De Koning executed a real estate
mortgage (REM) in favor of Metrobank over a condominium unit and all its
improvements.
When De Koning failed to pay his loan despite demand, Metrobank instituted
extrajudicial foreclosure proceedings against the REM. Metrobank was the
highest bidder at the public auction of the condominium unit and a Certificate of
Sale was issued in the bank's favor. Metrobank duly registered this Certificate of
Sale with the Registry of Deeds for Makati City.
De Koning failed redeem the property. Thus, Metrobank demanded that he turn
over possession of the condominium unit. When De Koning refused, Metrobank
filed with the RTC Makati, Branch 65, an ex parte petition for a writ of possession
over the foreclosed property.
The lower court issued an order setting the ex parte hearing of Metrobanks
petition and directing that a copy of the order be given to De Koning to inform
him of the existence of the proceedings.
During the scheduled ex parte hearing, De Koning’s counsel appeared and
manifested that he filed a motion to dismiss on the ground that Metrobanks
petition violated Section 5, Rule 7 of the Rules of Court (Rules) which requires the
attachment of a certification against forum shopping to a complaint or other
initiatory pleading.
The RTC agreed with De Koning and dismissed Metrobanks. The lower court
denied Metrobanks motion for reconsideration. Metrobank thus elevated the
matter to the CA on a petition for certiorari.
The CA affirmed the dismissal of Metrobanks ptition. It explained that Section 5,
Rule 7 of the Rules is not limited to actions, but covers any initiatory pleading that
asserts a claim for relief. Since Metrobanks petition for writ of possession is an
initiatory pleading, it must perforce be covered by this rule. Thus, Metrobanks
failure to disclose in the verification and certification the existence of the two
cases filed by De Koning, involving the issue of Metrobanks right to foreclose on
the property, rendered the petition dismissible.
The CA denied Metrobanks subsequent motion for reconsideration. Hence, this
petition for review on certiorari.
the orders of the Regional Trial Court of Makati City, Branch 65 in LRC Case No.
M-4068 dated September 18, 2000 and October 23, 2000, is REVERSED and SET
ASIDE. LRC Case No. M-4068 is ordered remanded to the Regional Trial Court of
Makati City, Branch 65, for further proceedings and proper disposition. Costs
against respondent Manfred Jacob De Koning.

Issue: Whether or not a petition for a writ of possession requires a certificate

against non-forum shopping

Ruling: No.

In Sps. Arquiza v. CA, where we said:

The certification against forum shopping is required only in a complaint or

other initiatory pleading. The ex parte petition for the issuance of a writ of
possession filed by the respondent is not an initiatory pleading. Although
the private respondent denominated its pleading as a petition, it is, nonetheless,
a motion. What distinguishes a motion from a petition or other pleading is not
its form or the title given by the party executing it, but rather its purpose. The
office of a motion is not to initiate new litigation, but to bring a material but
incidental matter arising in the progress of the case in which the motion is filed. A
motion is not an independent right or remedy, but is confined to incidental
matters in the progress of a cause. It relates to some question that is collateral to
the main object of the action and is connected with and dependent upon the
principal remedy. An application for a writ of possession is a mere incident in the
registration proceeding. Hence, although it was denominated as a petition, it was
in substance merely a motion. Thus, the CA correctly made the following
observations:

Such petition for the issuance of a writ of possession is filed in the form of an ex
parte motion, inter alia, in the registration or cadastral proceedings if the
property is registered. Apropos, as an incident or consequence of the original
registration or cadastral proceedings, the motion or petition for the issuance of a
writ of possession, not being an initiatory pleading, dispels the requirement of a
forum-shopping certification. Axiomatic is that the petitioner need not file a
certification of non-forum shopping since his claims are not initiatory in
character (Ponciano vs. Parentela, Jr., 331 SCRA 605 [2000])

Since a petition for a writ of possession under Section 7 of Act No. 3135, as
amended, is neither a complaint nor an initiatory pleading, a certificate against
non-forum shopping is not required. The certificate that Metrobank attached to
its petition is thus a superfluity that the lower court should have disregarded.

WHEREFORE, premises considered, we GRANT the petition. The Decision of the

Court of Appeals in CA-G.R. SP No. 62325 dated November 21, 2002, as well as