28.

LAFARGE CEMENT PHILIPPINE INC. VS CONTINENTAL CEMENT CORP.

(GR. NO. 155173, NOVEMBER 23, 2004)
Doctrine:
A solidary debtor may, in actions filed by the creditor, avail itself of all defences which are
derived from the nature of the obligation and of those which are personal to him, or pertain to his
own share. With respect to those which personally belong to the others, he may avail himself thereof
only as regards that part of the debt for which the latter are responsible.

Counterclaims are defined in Section 6 of Rule 6 of the Rules of Civil Procedure as any claim which
a defending party may have against an opposing party. They are generally allowed in order to avoid
a multiplicity of suits and to facilitate the disposition of the whole controversy in a single action, such
that the defendants demand may be adjudged by a counterclaim rather than by an independent suit.

The only limitations to this principle are

1. that the court should have jurisdiction over the subject matter of the counterclaim, and
2. that it could acquire jurisdiction over third parties whose presence is essential for its
adjudication.

A counterclaim may either be permissive or compulsory. It is permissive if it does not arise out of or
is not necessarily connected with the subject matter of the opposing partys claim. A permissive
counterclaim is essentially an independent claim that may be filed separately in another case.

A counterclaim is compulsory when its object arises out of or is necessarily connected with the
transaction or occurrence constituting the subject matter of the opposing partys claim and does not
require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction.

Unlike permissive counterclaims, compulsory counterclaims should be set up in the same action;
otherwise, they would be barred forever.

Criteria to determine whether a counterclaim is compulsory or permissive: (NAMARCO v.

Federation of United Namarco Distributors)
1) Are issues of fact and law raised by the claim and by the counterclaim largely the same?
2) Would res judicata bar a subsequent suit on defendants claim, absent the compulsory
counterclaim rule?
3) Will substantially the same evidence support or refute plaintiffs claim as well as defendants
counterclaim?
4) Is there any logical relation between the claim and the counterclaim? A positive answer to all four
questions would indicate that the counterclaim is compulsory

The compelling test of compulsoriness characterizes a counterclaim as compulsory if there

should exist a logical relationship between the main claim and the counterclaim. There exists such a
relationship when conducting separate trials of the respective claims of the parties would entail
substantial duplication of time and effort by the parties and the court; when the multiple claims
involve the same factual and legal issues; or when the claims are offshoots of the same basic
controversy between the parties. (Quintanilla v. CA and reiterated in Alday v. FGU Insurance
Corporation)
Petitioners counterclaim for damages fulfils the necessary requisites of a compulsory counterclaim.
They are damages claimed to have been suffered by petitioners as a consequence of the action filed
against them. They have to be pleaded in the same action; otherwise, petitioners would be precluded
by the judgment from invoking the same in an independent action. The pronouncement in Papa vs.
Banaag (17 SCRA 1081) (1966) is in point:

Compensatory, moral and exemplary damages, allegedly suffered by the creditor in

consequence of the debtors action, are also compulsory counterclaim barred by the dismissal
of the debtors action. They cannot be claimed in a subsequent action by the creditor against
the debtor.

A counterclaim is defined as any claim for money or other relief which a defending party may have
against an opposing party. However, the general rule that a defendant cannot by a counterclaim
bring into the action any claim against persons other than the plaintiff admits of an exception under
Section 14, Rule 6 which provides that when the presence of parties other than those to the original
action is required for the granting of complete relief in the determination of a counterclaim or cross-
claim, the court shall order them to be brought in as defendants, if jurisdiction over them can be
obtained. The inclusion, therefore, of Cardenas in petitioners counterclaim is sanctioned by the rules.

The prerogative of bringing in new parties to the action at any stage before judgment is intended to
accord complete relief to all of them in a single action and to avert a duplicity and even a multiplicity
of suits thereby.

Compulsory counterclaim may implead persons not parties to the original complaint, the general
rule -- a defendant in a compulsory counterclaim need not file any responsive pleading, as it is
deemed to have adopted the allegations in the complaint as its answer. The filing of a responsive
pleading is deemed a voluntary submission to the jurisdiction of the court; a new party impleaded
by the plaintiff in a compulsory counterclaim cannot be considered to have automatically and
unknowingly submitted to the jurisdiction of the court. A contrary ruling would result in mischievous
consequences whereby a party may be indiscriminately impleaded as a defendant in a compulsory
counterclaim; and judgment rendered against it without its knowledge, much less participation in the
proceedings, in blatant disregard of rudimentary due process requirements.

Section 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or
otherwise, as many causes of action as he may have against an opposing party, subject to the
following conditions:

(a) The party joining the causes of action shall comply with the rules on joinder of parties; x x x

Section 6. Permissive joinder of parties. All persons in whom or against whom any right to relief
in respect to or arising out of the same transaction or series of transactions is alleged to exist
whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules,
join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact
common to all such plaintiffs or to all such defendants may arise in the action; but the court may
make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put
to expense in connection with any proceedings in which he may have no interest.

The foregoing procedural rules are founded on practicality and convenience. They are meant to
discourage duplicity and multiplicity of suits. This objective is negated by insisting -- as the court a
quo has done -- that the compulsory counterclaim for damages be dismissed, only to have it possibly
re-filed in a separate proceeding. More important, as we have stated earlier, Respondents Lim and
Mariano are real parties in interest to the compulsory counterclaim; it is imperative that they be
joined therein. Section 7 of Rule 3 provides:

Compulsory joinder of indispensable parties. Parties in interest without whom no final determination
can be had of an action shall be joined either as plaintiffs or defendants.

Obligations may be classified as either joint or solidary. Joint or jointly or conjoint means mancum
or mancomunada or pro rata obligation; on the other hand, solidary obligations may be used
interchangeably with joint and several or several.

The ambiguity in petitioners counterclaims notwithstanding, respondents liability, if proven, is

solidary. This characterization finds basis in Article 1207 of the Civil Code, which provides that
obligations are generally considered joint, except when otherwise expressly stated or when the law or
the nature of the obligation requires solidarity. However, obligations arising from tort are, by their
nature, always solidary. We have assiduously maintained this legal principle as early as 1912 in
Worcester v. Ocampo in which we held:

x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis of
the present action is tort. They fail to recognize the universal doctrine that each joint tort feasor is
not only individually liable for the tort in which he participates, but is also jointly liable with his tort
feasors. x x x

It may be stated as a general rule that joint tort feasors are all the persons who command, instigate,
promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who
approve of it after it is done, if done for their benefit. They are each liable as principals, to the same
extent and in the same manner as if they had performed the wrongful act themselves. x x x

Joint tort feasors are jointly and severally liable for the tort which they commit. The
persons injured may sue all of them or any number less than all. Each is liable for the whole damages
caused by all, and all together are jointly liable for the whole damage. It is no defense for one sued
alone, that the others who participated in the wrongful act are not joined with him as defendants;
nor is it any excuse for him that his participation in the tort was insignificant as compared to that of
the others. x x x

Joint tort feasors are not liable pro rata. The damages can not be apportioned among them,
except among themselves. They cannot insist upon an apportionment, for the purpose of each paying
an aliquot part. They are jointly and severally liable for the whole amount. x x x

A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any claim
which might exist against the others. There can be but satisfaction. The release of one of the joint
tort feasors by agreement generally operates to discharge all. x x x
In a joint obligation, each obligor answers only for a part of the whole liability; in a solidary or joint
and several obligation, the relationship between the active and the passive subjects is so close that
each of them must comply with or demand the fulfillment of the whole obligation.[31] The fact that
the liability sought against the CCC is for specific performance and tort, while that sought against the
individual respondents is based solely on tort does not negate the solidary nature of their liability for
tortuous acts alleged in the counterclaims. Article 1211 of the Civil Code is explicit on this point:

Solidarity may exist although the creditors and the debtors may not be bound in the same manner
and by the same periods and conditions.

Article 1222 of the Civil Code provides:

A solidary debtor may, in actions filed by the creditor, avail itself of all defenses which are derived
from the nature of the obligation and of those which are personal to him, or pertain to his own share.
With respect to those which personally belong to the others, he may avail himself thereof only as
regards that part of the debt for which the latter are responsible.

29.

FORTUNE CORPORATION vs. HON. COURT OF APPEALS AND INTER-MERCHANTS

CORPORATION
(G.R. No. 108119, January 19, 1994)

The deposition-discovery procedure was designed to remedy the conceded inadequacy and
cumbersomeness of the pre-trial functions of notice-giving, issue formulation and face revelation
theretofore performs primarily by the pleadings.

The various modes or instruments of discovery are meant to serve 1) as a device, along with the pre
trial hearing under Rule 20, to narrow and clarify the basic issues between the parties and 2) as a
device for ascertaining the facts relative to those issues.

The evident purpose is to enable the parties consistent with recognized privileges to obtain the fullest
possible knowledge of the issues and facts before civil trials and thus prevent that said trials are
carried on in the dark. To this end, the field of inquiry that may be covered by depositions or
interrogatories is as broad as when the interrogated party is called as witness to testify orally at trial.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Section 16 of Rule 24 provides that after notice is served for taking a deposition by oral
examination, upon motion seasonably made by any party or by the person to be examined and upon
notice and for good cause shown, the court in which the action is pending may, among others, make
an order that the deposition shall not be taken.

This provision explicitly vests in the court the power to order that the deposition shall not be taken
and this grant connotes the authority to exercise discretion in connection therewith. It is well settled,
however, that the discretion conferred by law is not unlimited: that it must be exercised, not
arbitrarily, capriciously, or oppressively, but in a reasonable manner and in consonance with the spirit
of the law, to the end that its purpose may be attained.

Pursuant to this rule, it has been held that certiorari will not lie to review or correct discovery orders
made prior to trial. This is because, like other discovery orders, orders made under Section 16, Rule
24 are interlocutory and not appealable, considering that they do not finally dispose of the
proceeding or of any independent offshoot of it.

However, such rules are subject to the exception that discretionary acts will be reviewed where the
lower court or tribunal has acted without or in excess of its jurisdiction, where an interlocutory order
does not conform to essential requirements of law and may reasonably cause material injury
throughout subsequent proceedings for which the remedy of appeal will be inadequate, or where
there is a clear or serious abuse of discretion. It is our considered opinion that on the bases of
circumstances obtaining in the case at bar, and which will hereinafter be discussed, certiorari may be
availed of to review the questioned order of the trial court. SC ruled that certiorari may be availed of
to review the questioned order of the trial court.

II. It is true that to ensure that availment of the modes of discovery would be untrammeled and
efficacious, Rule 29 imposes serious sanctions on the party who refuses to comply with or respond to
the modes of discovery, such as dismissing his action or proceeding or part thereof, or rendering
judgment by default against the disobedient party; contempt of court, or arrest of the party or agent
of the party; payment of the amount of reasonable expenses incurred in obtaining a court order to
compel discovery; taking the matters inquired into as established in accordance with the claim of the
party seeking discovery; refusal to allow the disobedient party to support or oppose designated
claims or defenses; striking out his pleadings or parts thereof; or staying further proceedings. Section
16 of Rule 24 clearly states that it is only upon notice and for good cause shown that the court may
order that the deposition shall not be taken.

The matter of good cause is to be determined by the court in the exercise of judicial discretion. The
requirement, however, that good cause be shown for a protective order puts the burden on the party
seeking relief to show some plainly adequate reasons for the order. A particular and specific
demonstration of facts, as distinguished from conclusory statements, is required to establish good
cause for the issuance of a protective order.

What constitutes good cause furthermore depends upon the kind of protective order that is sought.

The allegation that the deponent knows nothing about the matters involved does not justify
prohibiting the taking of the deposition, nor that whatever the witness knows is protected by the
"work product doctrine," nor that privileged information or trade secrets will be sought in the
course of the examination, nor that all the transactions were either conducted or confirmed in
writing. 18 In the present case, private respondent failed to sufficiently establish that there is good
cause to support the order of the trial court that the deposition shall not be taken.
Oral deposition might be taken after service of interrogatories, the courts took a relatively liberal
view. In Howard v. States Marine Corp., the first case in which this question was raised, Judge Hilbert
said that:
"Where it develops that examination by interrogatories has been inadequate, the court
unquestionably has, and in a proper case should exercise, discretion to permit an oral examination.
But it should be made to clearly appear that the relevant subject matter will not involve the
interrogation of the witness with respect to those particulars upon which he was examined by
interrogatories." It is quite clear, therefore, and we so hold that under the present Rules the fact that
a party has resorted to a particular method of discovery will not bar subsequent use of other
discovery devices, as long as the party is not attempting to circumvent a ruling of the court, or to
harass or oppress the other party. As a matter of practice, it will often be desirable to resort to both
interrogatories and depositions in one or the other sequence.

The availability of the proposed deponent to testify in court does not constitute "good cause" to
justify the court's order that his deposition shall not be taken. That the witness is unable to attend or
testify is one of the grounds when the deposition of a witness may be used in court during the trial.
25 But the same reason cannot be successfully invoked to prohibit the taking of his deposition.
The right to take statements and the right to use them in court have been kept entirely distinct. The
utmost freedom is allowed in taking depositions; restrictions are imposed upon their use.

Regardless of the development of devices for pre-trial fact investigation, our legal system is now
thoroughly committed to the notion that on the trial itself the adducing of facts by viva voce
testimony of witnesses — whose demeanor and manner are subject to the observation of the judge
— is superior to the use of written statements of the same witnesses. Preference for oral testimony
has dictated most of the limitations on the use of depositions as evidence. And since their use as
evidence was originally conceived as the sole function of depositions proper, the limitations on their
taking dovetailed with the limitations on their use. But under the concept adopted by the new Rules,
the deposition serves the double function of a method of discovery — with use on trial not
necessarily contemplated — and a method of presenting testimony.

Accordingly, no limitations other than relevancy and privilege have been placed on the taking of
depositions, while the use at the trial is subject to circumscriptions looking toward the use of oral
testimony wherever practicable.

The main reason given in support of the contested order is that, if the deposition were taken, the
court could not observe the behavior of the deponents. The insufficiency of this circumstance to
justify the interdiction of the taking of a deposition becomes apparent when we consider that,
otherwise, no deposition could ever be taken, said objection or handicap being common to all
depositions alike.

Finally, in the absence of proof, the allegation that petitioner merely intended to annoy, harass or
oppress the proposed deponent cannot ably support the setting aside of a notice to take deposition.
Orders to protect the party or witness from annoyance, embarrassment or oppression may be issued
if the following requirements are complied with: (a) that there is a motion made by any party or by
the person to be examined; (b) that the motion has been seasonably filed; (c) that there is good
cause shown; and (d) that notice of such motion has been served to the other party. Inconvenience
to the party whose deposition is to be taken is not a valid objection to the taking of his deposition. 32
No doubt, private respondent and its representative who is to be examined will be inconvenienced —
as are all parties when required to submit to examination — but this is no ground for denial of the
deposition-discovery process.

30.
LIANAS SUPERMARKET vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
LABOR UNION

This is a representative suit as distinguished from class suit defined in Sec. 12, Rule 3, of the Rules of
Court -Sec. 12. Class suit.

When the subject matter of the controversy is one of common or general interest to many persons,
and the parties are so numerous that it is impracticable to bring them all before the court, one or
more may sue or defend for the benefit of all. But in such case the court shall make sure that the
parties actually before it are sufficiently numerous and representative so that all interests concerned
are fully protected. Any party in interest shall have a right to intervene in protection of his individual
interest.

What is contemplated, as will be noted, is that (a) the subject matter in controversy is of common or
general interest to many persons, and (b) those persons are so numerous as to make it impracticable
to bring them all before the court x x x What makes the situation a proper case for a class suit is the
circumstance that there is only one right or cause of action pertaining or belonging in common to
many persons (Italics supplied), not separately or severally to distinct individuals x x x The object of
the suit is to obtain relief for or against numerous persons as a group or as an integral entity, and
not as separate, distinct individuals whose rights or liabilities are separate from and independent of
those affecting the others x x x The other factor that serves to distinguish the rule on class suits x x x
is x x x the numerousness of parties involved x x x The rule is that for a class suit to be allowed, it is
needful inter alia that the parties be so numerous that it would be impracticable to bring them all
before the court.

Sec. 3. Representative parties. - A trustee of an express trust, a guardian, executor or

administrator, or a party authorized by statute (Italics supplied), may sue or be sued without joining
the party for whose benefit the action is presented or defended; but the court may, at any stage of
the proceedings, order such beneficiary to be made a party x x x.

One of the rights granted by Art. 242 of the Labor Code to a legitimate labor organization, like
respondent Union, is to sue and be sued in its registered name. In Liberty Manufacturing Workers
Union v. Court of First Instance of Bulacan,4 citing National Brewery and Allied Industries Labor
Union of the Philippines v. San Miguel Brewery, Inc.,5 and Itogon-Suyoc Mines, Inc. v. Sangilo-Itogon
Workers Union,6 the Court held that the aforementioned provision authorizes a union to file a
representative suit for the benefit of its members in the interest of avoiding an otherwise
cumbersome procedure of joining all union members in the complaint, even if they number by the
hundreds. The Court further rationalized that

A representative suit is akin to a class suit in the limited sense that the phrases found in Sec. 12 of
Rule 3, one or more may sue or defend for the benefit of all, and the parties actually before it are
sufficiently numerous and representative, are similar to the phrase may sue or be sued without
joining the party for whose benefit the action is presented or defended found in Sec. 3 of the same
Rule. In other words, both suits are always filed in behalf of another or others. That is why the two
terms are sometimes used interchangeably.

Before money claims can be the object of settlement through a union, the individual consent of the
employees concerned should first be procured. This is because waiver of money claims is considered
a personal right which must be protected by the courts on consideration of public policy. To really
give teeth to the constitutional mandate of giving laborers maximum protection and security, they
must be protected not only against their employer but also against the leaders of their own labor
union. Thus, in General Rubber and Footwear Corporation v. Drilon,13 citing Kaisahan ng
Manggagawa sa La Campana v. Sarmiento,14 it was held

Money claims due to laborers cannot be the object of settlement or compromise effected by a union
or counsel without the specific individual consent of each laborer concerned. The beneficiaries are the
individual complainants themselves. The union to which they belong can only assist them but cannot
decide for them x x x.

31.

DAVID REYES (Substituted by Victoria R. Fabella), petitioner, vs. JOSE LIM, CHUY CHENG
KENG and HARRISON LUMBER, INC., respondents.

MAIN ISSUE: EQUITY JURISDICTION

The purpose of the exercise of equity jurisdiction is to prevent unjust enrichment and to ensure
restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable to
adapt its judgments to the special circumstances of a case because of the inflexibility of its statutory
or legal jurisdiction. Equity is the principle by which substantial justice may be attained in cases
where the prescribed or customary forms of ordinary law are inadequate.

Rescission is possible only when the person demanding rescission can return whatever he may be
obliged to restore. A court of equity will not rescind a contract unless there is restitution, that is, the
parties are restored to the status quo ante.

32.

MAXIMINA A. BULAWAN vs. EMERSON B. AQUENDE

(G.R. No. 182819, June 22, 2011)

ISSUE: Petition for Annulment of Judgment is the Proper Remedy

In a petition for annulment of judgment, the judgment may be annulled on the grounds of extrinsic
fraud and lack of jurisdiction. Fraud is extrinsic where it prevents a party from having a trial or from
presenting his entire case to the court, or where it operates upon matters pertaining not to the
judgment itself but to the manner in which it is procured. The overriding consideration when extrinsic
fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having
his day in court. On the other hand, lack of jurisdiction refers to either lack of jurisdiction over the
person of the defending party or over the subject matter of the claim, and in either case the
judgment or final order and resolution are void. Where the questioned judgment is annulled, either
on the ground of extrinsic fraud or lack of jurisdiction, the same shall be set aside and considered
void.

Moreover, annulment of judgment is a remedy in law independent of the case where the judgment
sought to be annulled was rendered. Consequently, an action for annulment of judgment may be
availed of even if the judgment to be annulled had already been fully executed or implemented.

ISSUE: Proper Party to Sue for the Annulment of the Judgment

Section 7, Rule 3 of the Rules of Court defines indispensable parties as parties in interest without
whom no final determination can be had of an action. An indispensable party is one whose interest
will be affected by the courts action in the litigation. As such, they must be joined either as plaintiffs
or as defendants. The general rule with reference to the making of parties in a civil action requires,
of course, the joinder of all necessary parties where possible, and the joinder of all indispensable
parties under any and all conditions, their presence being a sine qua non for the exercise of judicial
power. It is precisely when an indispensable party is not before the court (that) the action should be
dismissed. The absence of an indispensable party renders all subsequent actions of the court null and
void for want of authority to act, not only as to the absent parties but even as to those present.

Moreover, a person who was not impleaded in the complaint cannot be bound by the decision
rendered therein, for no man shall be affected by a proceeding in which he is a stranger.42 In
National Housing Authority v. Evangelista,43 we said:

33.
LILIA B. ADA vs. FLORANTE BA YLON
G.R. No. 182435, August 13, 2012

Main Issue: Propriety of Rescission

Rescission is a remedy to address the damage or injury caused to the contracting parties or third
persons.

Rescission is a remedy granted by law to the contracting parties and even to third persons, to secure
the reparation of damages caused to them by a contract, even if it should be valid, by means of the
restoration of things to their condition at the moment prior to the celebration of said contract. It is a
remedy to make ineffective a contract, validly entered into and therefore obligatory under normal
conditions, by reason of external causes resulting in a pecuniary prejudice to one of the contracting
parties or their creditors.
Contracts which are rescissible are valid contracts having all the essential requisites of a contract, but
by reason of injury or damage caused to either of the parties therein or to third persons are
considered defective and, thus, may be rescinded.

The kinds of rescissible contracts, according to the reason for their susceptibility to rescission, are the
following: first, those which are rescissible because of lesion or prejudice;43 second, those which are
rescissible on account of fraud or bad faith; and third, those which, by special provisions of law,are
susceptible to rescission.

34.

PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN vs. STANDARD

INSURANCE COMPANY, INC., and MARTINA GICALE

DOCTRINE:

The totality rule as exemplified by Section 33 of B.P. Blg. 129 which states, among others, that
where there are several claims or causes of action between the same or different parties, embodied
in the same complaint, the amount of the demand shall be the totality of the claims in all the causes
of action, irrespective of whether the causes of action arose out of the same or different transactions.

MAIN ISSUE: MISJOINDER OF PARTIES

Sec. 6. Permissive joinder of parties.

All persons in whom or against whom any right to relief in respect to or arising out of the same
transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative,
may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all such defendants
may arise in the action; but the court may make such orders as may be just to prevent any plaintiff
or defendant from being embarrassed or put to expense in connection with any proceedings in which
he may have no interest.

Permissive joinder of parties requires that: (a) the right to relief arises out of the same transaction or
series of transactions; (b) there is a question of law or fact common to all the plaintiffs or
defendants; and (c) such joinder is not otherwise proscribed by the provisions of the Rules on
jurisdiction and venue.

To determine identity of cause of action, it must be ascertained whether the same evidence which is
necessary to sustain the second cause of action would have been sufficient to authorize a recovery in
the first. Thus, the filing by both respondents of the complaint with the court below is in order. Such
joinder of parties avoids multiplicity of suit and ensures the convenient, speedy and orderly
administration of justice.

Corollarily, Section 5(d), Rule 2 of the same Rules provides:

Sec. 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or
otherwise, as many causes of action as he may have against an opposing party, subject to the
following conditions:
xxx

(d) Where the claims in all the causes of action are principally for recovery of money the aggregate
amount claimed shall be the test of jurisdiction.

The above provision presupposes that the different causes of action which are joined accrue in favor
of the same plaintiff/s and against the same defendant/s and that no misjoinder of parties is
involved.[8] The issue of whether respondents claims shall be lumped together is determined by
paragraph (d) of the above provision. This paragraph embodies the totality rule as exemplified by
Section 33 of B.P. Blg. 129 which states, among others, that where there are several claims or
causes of action between the same or different parties, embodied in the same complaint,
the amount of the demand shall be the totality of the claims in all the causes of action,
irrespective of whether the causes of action arose out of the same or different
transactions.

As previously stated, respondents cause of action against petitioners arose out of the same
transaction. Thus, the amount of the demand shall be the totality of the claims.

35.

CENTRAL BANK BOARD OF LIQUIDATORS vs. BANCO FILIPINO SAVINGS AND

MORTGAGE BANK

The second amendment of the Complaint was improper.

Rule 10 of the 1997 Revised Rules of Court allows the parties to amend their pleadings (a) by adding
or striking out an allegation or a party’s name; or (b) by correcting a mistake in the name of a party
or rectifying a mistaken or an inadequate allegation or description in the pleadings for the purpose of
determining the actual merits of the controversy in the most inexpensive and expeditious manner.

The prevailing rule on the amendment of pleadings is one of liberality, with the end of obtaining
substantial justice for the parties. However, the option of a party-litigant to amend a pleading is not
without limitation. If the purpose is to set up a cause of action not existing at the time of the filing of
the complaint, amendment is not allowed. If no right existed at the time the action was commenced,
the suit cannot be maintained, even if the right of action may have accrued thereafter.

On the other hand, the Second Amended/Supplemental Complaint stemmed from the alleged
oppressive and arbitrary acts committed by the BSP and its MB against Banco Filipino after
respondent bank was reopened in 1994. Since the acts or omissions allegedly committed in violation
of respondent’s rights are different, they constitute separate causes of action.

The second supplemental pleading was improper.

Rule 10 of the 1997 Revised Rules of Court allows the parties to supplement their pleadings by
setting forth transactions, occurrences, or events that happened since the date of the pleading
sought to be supplemented.

However, the option of a party-litigant to supplement a pleading is not without limitation. A

supplemental pleading only serves to bolster or add something to the primary pleading. Its usual
function is to set up new facts that justify, enlarge, or change the kind of relief sought with respect
to the same subject matter as that of the original complaint.

The amendment/supplement violates the rules on joinder of parties and causes of action.

Moreover, the admission of the Second Amended/Supplemental Complaint is inappropriate because it

violates the rule on joinder of parties and causes of action. If its admission is upheld, the causes of
action set forth therein would be joined with those in the original Complaint. The joinder of causes of
action is indeed allowed under Section 5, Rule 2 of the 1997 Rules of Court; but if there are multiple
parties, the joinder is made subject to the rules on joinder of parties under Section 6, Rule 3.
Specifically, before causes of action and parties can be joined in a complaint involving multiple
parties, (1) the right to relief must arise out of the same transaction or series of transactions and (2)
there must be a question of law or fact common to all the parties.

Procedural issues

As mentioned at the outset, the Court will confine its ruling on this Petition to procedural issues
pertaining to the propriety of the admission of the Second Amended/Supplemental Complaint. We will
not address the issues raised by petitioner with regard the findings of the trial and the appellate court
that the BSP is the successor-in-interest of the defunct CB and is considered a transferee pendente
lite[66] in the civil cases. These findings relate to the BSP’s potential liability for the causes of action
alleged in the original Complaint. At issue here is Banco Filipino’s attempt, through the Second
Amended/Supplemental Complaint, to hold the BSP and its MB liable for causes of action that arose
in 1994. Respondent is not without any relief. If the RTC finds that the BSP was indeed a transferee
pendente lite, the failure to implead it would not prevent the trial court from holding the BSP liable,
should liability now attach for acts alleged in the original Complaint.