Swagman Hotels and Travel Inc. vs.

Court of Appeals (Rule 1 & 2)

Facts:
The case of Swagman Hotels and Travel Inc. v. Court of Appeals involves a complaint
filed by Neal B. Christian against Swagman Hotels and Travel Inc. (petitioner) for a
sum of money and damages. The complaint alleges that the petitioner obtained loans
from Christian through three promissory notes, each with a principal amount of
US$50,000, payable after three years with an interest of 15% per annum. The petitioner
allegedly paid the interest at a reduced rate of 6% per annum from January 1998,
violating the terms of the promissory notes. Christian demanded payment of the
principal loans and unpaid interests, prompting the petitioner to file an answer raising
defenses of lack of cause of action and novation of the principal obligations.
Issue:
1. Where there is no cause of action, is the decision of the lower court valid?
2. May the respondent court of appeals validly affirm a decision of the lower court
which is invalid due to lack of cause of action?
Ruling:
The Supreme Court ruled that a complaint that lacks a cause of action at the time it was
filed cannot be cured by the accrual of a cause of action during the pendency of the
case. The Court held that the trial court and the Court of Appeals erred in affirming the
decision despite the lack of cause of action at the time the complaint was filed. The
Court emphasized that the defect of lack of cause of action at the commencement of
the suit cannot be cured by the accrual of a cause of action during the pendency of the
case.
With these findings of facts, it has become glaringly obvious that when the complaint
for a sum of money and damages was filed with the trial court on 2 February 1999, no
cause of action has as yet existed because the petitioner had not committed any act in
violation of the terms of the three promissory notes as modified by the renegotiation
in December 1997. Without a cause of action, the private respondent had no right to
maintain an action in court, and the trial court should have therefore dismissed his
complaint.
Spouses Crisologo vs. JEWM Agro-Industrial Corp. (Rule 3)
Facts:
The controversy in this case stemmed from various collection cases filed against So
Keng Kok, the owner of two parcels of land covered by Transfer Certificate of Titles
(TCT) Nos. 292597 and 292600. The levies were annotated on the back of the said
titles. Spouses Crisologo, as plaintiffs in two collection cases, attached the subject
properties. Respondent JEWM Agro-Industrial Corporation (JEWM) was the
successor-in-interest of one Sy Sen Ben, the plaintiff in another collection case. JEWM
filed a separate action for cancellation of lien with a prayer for the issuance of a
preliminary injunction before the Regional Trial Court (RTC), Branch 14, docketed as
Civil Case No. 33,551-2010. Spouses Crisologo appeared in open court and filed a Very
Urgent Manifestation questioning the authority of the court to restrain the execution
proceedings in another case.
Issue:
The main issues raised in the case were: (1) whether the Court of Appeals erred in
holding that the action for cancellation of annotations may proceed even without notice
to and impleading the party/ies who caused the annotations, in clear contravention of
the rule on joinder of parties and basic due process;
Ruling:
The Supreme Court ruled in favor of Spouses Crisologo, holding that the Court of
Appeals erred in affirming the RTC-Br. 14 ruling that the action for cancellation of lien
may proceed without impleading Spouses Crisologo as indispensable parties. The Court
held that RTC-Br. 14 committed grave abuse of discretion in failing to recognize
Spouses Crisologo as indispensable parties in the case for cancellation of lien. The Court
also ruled that Spouses Crisologo had legal standing to file a petition for certiorari under
Rule 65 and that the CA erred in dismissing the petition.
Republic vs. Glasgow Credit and Collection Services, Inc. (Rule 4)
Facts:
The Republic of the Philippines, represented by the Anti-Money Laundering Council
(AMLC), filed a complaint for civil forfeiture against Glasgow Credit and Collection
Services, Inc. (Glasgow) and Citystate Savings Bank, Inc. (CSBI) in the Regional Trial
Court (RTC) of Manila, Branch 47. The complaint sought to freeze and forfeit funds in
a bank account allegedly related to unlawful activities, specifically estafa and violation
of the Securities Regulation Code. The trial court issued a 72-hour temporary restraining
order (TRO) and later a writ of preliminary injunction, which was served on CSBI.
However, summons to Glasgow was returned "unserved" as it could no longer be found
at its last known address. The Republic filed a motion for leave of court to serve
summons by publication, but the trial court did not resolve it. Glasgow filed a motion
to dismiss, alleging improper venue, insufficiency of the complaint, and failure to
prosecute. The trial court granted the motion to dismiss, prompting the Republic to file
a petition for review with the Supreme Court.
Issue:
The main issues raised in this case are:
1. Was the complaint for civil forfeiture filed in the proper venue?
Ruling:
The Supreme Court granted the petition for review and set aside the trial court's order
dismissing the complaint. The Court ruled that:
1. The complaint was filed in the proper venue, as the RTC of Manila was a proper
venue for civil forfeiture cases under the Rule of Procedure in Cases of Civil
Forfeiture.
The Rule of Procedure in Cases of Civil Forfeiture provides that the venue of civil
forfeiture cases is any regional trial court of the judicial region where the monetary
instrument, property, or proceeds are located.
Briones vs. Court of Appeals (Rule 4)
Facts:
The case of Virgilio C. Briones vs. Cash Asia Credit Corporation revolves around a
complaint filed by Briones against Cash Asia for nullity of mortgage contract,
promissory note, loan agreement, foreclosure of mortgage, cancellation of transfer
certificate of title, and damages. Briones alleged that he is the owner of a property
covered by Transfer Certificate of Title (TCT) No. 160689, and that his property had
been foreclosed and a writ of possession had been issued in favor of Cash Asia.
According to Briones, he never contracted any loans from Cash Asia and that his
signature on the subject contracts was forged. In response, Cash Asia filed a motion to
dismiss on the ground of improper venue, citing the venue stipulation in the subject
contracts which states that all legal actions arising out of the contracts should only be
brought in or submitted to the jurisdiction of the proper court of Makati City.
Issue:
The main issue raised in this case is whether or not the Court of Appeals (CA) gravely
abused its discretion in ordering the outright dismissal of Briones's complaint on the
ground of improper venue.
Ruling:
The Supreme Court held that the CA gravely abused its discretion in dismissing
Briones's complaint on the ground of improper venue. The Court stressed that the
general rule is that the venue of real actions is the court which has jurisdiction over the
area wherein the real property involved, or a portion thereof, is situated. In this case,
Briones properly filed his complaint before a court in the City of Manila where the
subject property is located. The Court also noted that the venue stipulation found in
the subject contracts is indeed restrictive in nature, but since Briones's complaint
directly assails the validity of the subject contracts, claiming forgery in their execution,
he cannot be expected to comply with the venue stipulation. The Court further
emphasized that Briones's compliance with the venue stipulation would mean an
implicit recognition of the validity of the contracts, which is contrary to his claim of
forgery.
Polytrade Corp. vs. Blanco (Rule 4)
Facts:
Polytrade Corporation, a company with its principal office and place of business in
Makati, Rizal, filed a suit against Victoriano Blanco, a resident of Meycauayan, Bulacan,
to recover the purchase price of rawhide delivered to Blanco. The case was filed in the
Court of First Instance of Bulacan, and Blanco moved to dismiss the case on the ground
of improper venue, claiming that by contract, suit may only be lodged in the courts of
Manila. The Bulacan court overruled Blanco's motion, and he did not answer the
complaint. As a result, a default judgment was rendered against him.
Issue:
1. Was the venue properly laid in the province of Bulacan where defendant is a
resident?
Ruling:
The Supreme Court ruled as follows:
1. The venue was properly laid in the province of Bulacan where defendant is a
resident.
The Supreme Court's decision was based on the following reasons:
The court ruled that the venue was properly laid in Bulacan because the contracts
covering the first two causes of action did not contain a stipulation that suits may only
be lodged in the courts of Manila. The general rule set forth in Section 2(b), Rule 4 of
the Rules of Court governs, and as to said two causes of action, venue was properly laid
in Bulacan, the province of defendant's residence.
Unimasters Conglomeration, Inc. vs. Court of Appeals (Rule 4)
Facts:
The case of Unimasters Conglomeration, Inc. v. Court of Appeals involves a Dealership
Agreement between Kubota Agri-Machinery Philippines, Inc. (KUBOTA) and
Unimasters Conglomeration, Inc. (UNIMASTERS) dated October 28, 1988. The
agreement stipulates that "all suits arising out of this Agreement shall be filed with/in
the proper Courts of Quezon City." UNIMASTERS obtained a credit line with
Metropolitan Bank and Trust Co.-Tacloban Branch to answer for its obligations to
KUBOTA. Five years later, UNIMASTERS filed an action in the Regional Trial Court
of Tacloban City against KUBOTA, Reynaldo Go, and Metropolitan Bank and Trust
Company-Tacloban Branch for damages for breach of contract and injunction with
prayer for temporary restraining order. KUBOTA filed a motion to dismiss on the
ground of improper venue, which was denied by the trial court. The Court of Appeals
agreed with KUBOTA that the stipulation respecting venue in the Dealership
Agreement limited the venue of all suits arising thereunder only and exclusively to the
proper courts of Quezon City. UNIMASTERS appealed to the Supreme Court.
Issue:
The main issues raised in this case are:
1. Did the stipulation in the Dealership Agreement limit the venue of all suits
arising thereunder only and exclusively to the proper courts of Quezon City?
Ruling:
The Supreme Court ruled that the stipulation in the Dealership Agreement did not limit
the venue of all suits arising thereunder only and exclusively to the proper courts of
Quezon City. The Court held that the stipulation was merely permissive, allowing the
parties to file suits not only in Quezon City but also in other places fixed by law. The
Court also ruled that KUBOTA did not waive its objection to venue by participating in
the injunction hearing, as its lawyer had explicitly reserved its right to submit the motion
to dismiss. Finally, the Court ruled that the Court of Appeals erred in concluding that
the agreement on venue limited the venue of any complaint filed arising from the
dealership agreement between UNIMASTERS and KUBOTA.
Mangila vs. Court of Appeals (Rule 4)
Facts:
The case of Mangila v. Court of Appeals involves a dispute over the collection of money
between Anita Mangila, an exporter of sea foods, and Loreta Guina, the President and
General Manager of Air Swift International, a single registered proprietorship engaged
in the freight forwarding business. In January 1988, Mangila contracted Guina's services
for the shipment of her products to Guam, with an agreement to pay cash on delivery.
However, Mangila failed to pay Guina for three shipments, amounting to P109,376.95.
Despite several demands, Mangila never paid Guina, prompting Guina to file a civil
case for collection of sum of money before the Regional Trial Court of Pasay City in
June 1988. The trial court issued a writ of preliminary attachment against Mangila,
which was served on her household help in Pampanga in October 1988. Mangila filed
an urgent motion to discharge attachment, claiming that the court had not acquired
jurisdiction over her person and that the writ was improperly issued and served.
Issue:
The main issues raised by Mangila in her petition for review on certiorari before the
Supreme Court are:
1. Was there improper venue?
Ruling:
The Supreme Court granted Mangila's petition, ruling that:
1. The case was filed in an improper venue.
The Court also ruled that the stipulation on venue in Guina's invoice, which stated that
the agreed venue for collection was Makati, Metro Manila, did not limit the venue
exclusively to Makati, but rather, the parties could have agreed on an additional forum.
However, the Court held that Pasay City, where the case was filed, was not the proper
venue, as Guina's residence was in Parañaque City, and Mangila's residence was in San
Fernando, Pampanga.
Second to go vs. fabriano societi per azioni inc., (Rule 6)
The respondent filed a Complaint for collection of sum of money and damages against
the petitioners before the Regional Trial Court (RTC), Branch 157, Pasig City. The
respondent alleged that it delivered merchandise to the petitioners as evidenced by the
invoices and receipts attached to the Complaint. The petitioners failed to pay
P1,312,239.00 despite several demands. The respondent also alleged that it was
authorized by Asian Durables Manufacturing, Inc. (ADMI) to file
the Complaint against the petitioners based on the latter's similar dealings with ADMI.
Hence, Annexes "C" to "TT" of the Complaint pertain to the invoices and receipts
issued by ADMI.
The petitioners filed a Motion to dismiss alleging that the owner of the goods subject
of the case was ADMI; therefore, the respondent was not the Real Party In
Interest and the Complaint failed to state a Cause of Action. The RTC denied
the Motion to dismiss.
The petitioners filed an unverified answer reiterating their position that the respondent
has no Cause of Action against them. In response, the respondent filed a Motion for
judgment on the Pleadings.
The RTC granted this Motion and ruled that the genuineness and due Execution of
the Actionable documents attached to the Complaint were deemed admitted because
the petitioners failed to specifically deny them under oath. The RTC ordered the
petitioners to pay P1,312,239.00 plus Attorney's Fees and cost of suit. The RTC also
denied the Motion for reconsideration of the petitioners, prompting the latter to file
an appeal with the CA.
The CA affirmed the RTC's ruling on the Motion for judgment on the Pleadings but
deleted the RTC's award of Attorney's Fees for lack of basis.
On the issue of failure to state a Cause of Action, the CA ruled that the petitioners did
not assail ADMI's inclusion in the case as party-plaintiff. The non-inclusion of a
complainant's name in the title of a Complaint is not fatal, provided that there was a
statement in the body of the Complaint indicating that such complainant was made a
party to the action. In the present case, the respondent's authorization from ADMI was
stated in the body of the Complaint. Thus, the omission of ADMI's name in the title
of the Complaint was correctible through a formal amendment. 5
The CA denied the petitioners' Motion for reconsideration. Hence, this petition.
The petitioners allege that the CA erred in affirming the trial court's ruling because: 1)
their answer with counterclaims contained specific denials of the allegations in
the Complaint and provided reasons on why they tendered issue on the respondent's
claims; and 2) the Complaint did not state a valid Cause of Action against any of or
both the petitioners.
Ruling
The CA correctly affirmed the RTC's ruling.
A specific denial is made by specifying each material allegation of fact, the truth of
which the defendant does not admit and, whenever practicable, setting forth the
substance of the matters upon which he relies to support his denial. The purpose of
requiring the defendant to make a specific denial is to make him briefly disclose the
matters alleged in the Complaint which he intends to disprove at the trial, together
with the matter which he relied upon to support the denial. 6
A perusal of the petitioners' answer would show that they did not specifically deny the
transactions stated in the Complaint but only alleged that the respondent was not
a Real Party In Interest, hence, the Complaint failed to state a Cause of Action. The
issue of failure to state a Cause of Action was correctly ruled upon by the CA and the
RTC. Therefore, viewed in the light of the requisites and nature of a specific denial, the
CA correctly ruled that the petitioners' answer contained no specific denial of the
allegations in the Complaint.
Serrano Mahilum vs. Spouses Ilano (Rule 6)
Facts:
Ruby Ruth S. Serrano Mahilum, the registered owner of a parcel of land covered by
Transfer Certificate of Title No. 85533, entrusted the original owner's duplicate copy
of the title to Teresa Perez, a real estate broker, who claimed to assist her in obtaining
a loan. However, Perez failed to return the title, and Mahilum executed an Affidavit of
Loss, which was annotated on the original registry copy of the title. Later, Mahilum
received a letter from the Registry of Deeds informing her that the owner's duplicate
copy of the title was not lost, but was presented by respondents, spouses Edilberto and
Lourdes Ilano, who claimed to have purchased the property. Mahilum confronted the
respondents, who showed her a notarized Agreement with right of repurchase and an
unnotarized Deed of Absolute Sale, on which documents her purported signatures were
affixed. Mahilum denied executing these documents, and the respondents refused to
surrender the title to her.
Issue:
The main issues raised in the case are: (1) whether the failure to allege bad faith in the
complaint is a fatal defect considering that the subject documents (Agreement/Deed
of Absolute Sale with right to repurchase, and unnotarized Deed of Sale) were merely
simulated, fictitious, and forgery, and hence, null and void from the beginning; (2)
whether the petitioner was deprived of her property when the Court of Appeals granted
the demurrer to evidence on the ground that there was no cause of action when one of
the issues agreed upon by the parties during the pre-trial before the RTC was whether
private respondents were purchasers in good faith; and (3) whether the petitioner was
prevented from confronting the private respondents and their witnesses to determine
whether they really dealt with the petitioner and to determine who was the impostor
who signed the subject agreement and deed of absolute sale, and hence, allow the RTC
court to determine whether the subject agreement and deed of absolute sale were
simulated, fictitious, and null and void, and if private respondents were really purchasers
for value in good faith that will affect the outcome of the instant case.
Ruling:
The Court grants the Petition. The Court of Appeals erred in granting the demurrer to
evidence and dismissing the complaint for lack of cause of action. The issue of good or
bad faith is not relevant in this case since the title to the property remained with the
petitioner.
Warner Barnes and Co., Ltd. vs. Reyes (Rule 6)
Facts:
The case of Warner Barnes & Co., Ltd. v. Reyes involves an action for foreclosure of
mortgage filed by Warner Barnes & Co., Ltd. (plaintiff-appellee) against Guillermo C.
Reyes, et al. (defendants-appellants) on August 20, 1954. The deed of mortgage sued
upon was attached to the complaint as Annex "A". The appellants filed an answer on
September 30, 1954, alleging that they admit paragraph 1 of the complaint, but deny
knowledge or information sufficient to form a belief as to the truth of the material
averments of the remainder of the complaint. They also reserved the right to present
an amended answer with special defenses and counterclaim. However, no amended
answer was filed. The appellee moved for judgment on the pleadings on the ground
that the answer failed to tender an issue, which was granted by the lower court on
December 28, 1954.
Issue:
Does the allegation of want of knowledge or information as to the truth of the material
averments of the complaint amount to a mere general denial warranting judgment on
the pleadings or is it sufficient to tender a triable issue?
Ruling:
The Supreme Court affirmed the lower court's decision to grant judgment on the
pleadings, ruling that the defendants' denial of knowledge or information as to the truth
of the material averments of the complaint is considered a general denial and
insufficient to constitute an effective denial.
The court held that while the Rules of Court allow a defendant to deny knowledge or
information sufficient to form a belief as to the truth of a material averment, this form
of denial must be availed of with sincerity and in good faith. In this case, the appellants'
denial of knowledge or information was palpably untrue, as the fact as to which want
of knowledge was asserted was plainly and necessarily within their knowledge. The
court noted that the appellants could have easily determined and specifically alleged in
their answer whether or not they had executed the alleged mortgage, and that their
unexplained denial of information and belief of a matter of record was evasive and
insufficient to constitute an effective denial. The court also observed that the appellants'
answer was filed after an extension was granted, and that they failed to file an amended
answer despite reserving the right to do so, suggesting that they did not have any
defense or wanted to delay the proceedings.
Vargas vs. Estate of Ogsos (Rule 6)
Facts:
The case involves a contract of lease entered into by Rolando Ogsos, Sr. and the Heirs
of Fermina Pepico, represented by their Attorney-in-Fact, Catalino V. Noel, on
February 10, 1994. The lease contract covered five parcels of agricultural land with an
aggregate area of 23 hectares in Maaslum Manjuyod, Negros Oriental. The original lease
contract required Ogsos, Sr. to pay 230 piculs or 290.95 liquid-kilogram of centrifugal
sugar every crop year as lease rental. The term of the lease contract was later extended
for three years, and the lease rental was modified to P150,000.00 cash per year.
However, Elizabeth Sy-Vargas and her sister, Kathryn T. Sy, who are among the heirs
of Fermina, claimed that the lease rentals from crop year 1994-1995 to crop year 1998-
1999 were not paid. They filed a Complaint for Specific Performance and Damages
against respondents, Rolando Ogsos, Sr. and Rolando Ogsos, Jr., before the Regional
Trial Court (RTC) of Dumaguete City, Branch 36. The respondents alleged that they
had faithfully complied with their obligations under the lease contract, but were
prevented from harvesting the sugarcane by petitioner and Kathryn, resulting in their
default in the payment of their debts.
Issue:
The issues raised in this case are:
1. Was the motion for reconsideration filed by petitioner Elizabeth Sy-Vargas
timely?
2. Is the counterclaim of respondents compulsory or permissive in nature?
3. Are respondents entitled to their counterclaim for damages?
Ruling:
The Court ruled as follows:
1. The motion for reconsideration filed by petitioner Elizabeth Sy-Vargas was
timely filed.
2. The counterclaim of respondents is permissive in nature, and respondents are
required to pay docket fees.
3. Respondents are entitled to their counterclaim for damages, but the award shall
be deducted by the amount of P900,000.00, which represents the unpaid lease
rentals for the crop years 1999 to 2004.
Dio vs. Subic Bay Marine Exploratorium, Inc. (Rule 6)
Facts:
The case of Dio v. Subic Bay Marine Exploratorium, Inc. involves a foreign
corporation, H.S. Equities, Ltd. (HSE), and its representative, Virginia S. Dio, who
invested in a beach resort project of Subic Bay Marine Exploratorium, Inc. (SBME), a
domestic corporation. However, HSE refused to pay the balance of its subscription due
to alleged mismanagement of corporate funds by SBME. In response, SBME filed a
complaint against HSE and Dio, alleging that they unjustly refused to pay their
subscription and tried to dissuade local investors from putting in capital to SBME. HSE
and Dio countered with a compulsory counterclaim, seeking damages and attorney's
fees for an unfounded suit. The case was initially heard by the Regional Trial Court
(RTC) of Balanga City, Bataan, which dismissed the complaint due to a defective
certificate of non-forum shopping. This decision was later affirmed by the Court of
Appeals. Meanwhile, HSE and Dio's counterclaim was dismissed by the RTC on the
ground that the main case was already closed and terminated.
Issue:
The main issue raised in this case is whether the dismissal of the complaint is a bar to
the independent adjudication of the counterclaim. In other words, does the dismissal
of the main action necessarily result in the dismissal of the counterclaim, or can the
counterclaim proceed independently of the complaint?
Ruling:
The Supreme Court granted the petition and reversed the RTC Orders, allowing the
counterclaim to proceed independently of the complaint. The Court held that the
dismissal of the complaint does not ipso jure result in the dismissal of the counterclaim,
and the latter may remain for independent adjudication by the court, provided that it
states a sufficient cause of action and does not labor under any infirmity that may
warrant its outright dismissal. The Court's decision was based on the principle that the
jurisdiction of the court over the counterclaim is not abated by the dismissal of the main
action. The Court cited the case of Pinga v. Heirs of German Santiago, which ruled that
the dismissal of a complaint 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.
Alba, Jr. vs. Malapajo (Rule 6)
Facts:
The case of Alba, Jr. v. Malapajo involves a complaint filed by Arturo C. Alba, Jr. against
Raymund D. Malapajo, Ramil D. Malapajo, and the Register of Deeds of Roxas City.
Alba alleged that he was the previous registered owner of a parcel of land in Roxas City,
but his title was subsequently canceled by virtue of a deed of sale he allegedly executed
in favor of the Malapajo brothers for P500,000.00. The Malapajo brothers filed an
answer with counterclaim, contending that they were innocent purchasers for value and
that the deed of sale was a unilateral document which was presented to them already
prepared and notarized. They also alleged that Alba had obtained loans from them and
their mother, which were secured by real estate mortgages covering the subject
property, and that these loans had not been discharged. Alba filed a reply to answer and
answer to counterclaim, stating that the court had not acquired jurisdiction over the
nature of the Malapajo brothers' permissive counterclaim.
Issue:
The main issues raised in this case are:
1. Whether the counterclaim for reimbursement of a loan is compulsory and should
be set up in the same action as the claim regarding the validity of a deed of sale
and ownership of a parcel of land.
Ruling:
The Supreme Court ruled in favor of the Malapajo brothers, declaring that the
counterclaim for reimbursement of a loan is compulsory and should be set up in the
same action as the claim regarding the validity of a deed of sale and ownership of a
parcel of land. The Court also set aside the Resolutions dated February 28, 2011 and
August 31, 2011 issued by the Court of Appeals, which dismissed the petition for
certiorari and denied reconsideration thereof, respectively. The Supreme Court held
that the counterclaim is compulsory because it arises out of or is connected with the
transaction or occurrence constituting the subject matter of the opposing party's claim.