[SUBJECTCivPro] | [TOPIC Formal Requirements of Pleadings] 1

[Digest maker Kyle Subido]

CASE NAME Kaunlaran Lending Investors Inc.

et al v Uy
[GR NO. 154974] | [DATE Feb. 4, 2008] | [PONENTE Carpio-Morales, J.]

CASE SUMMARY Long case. Essentially Loreta Uy and her son/nephew tried
to set up a company (buy and sell, 2nd hand cars). Wilfredo (also part of the
company being formed) acted with the loaning company (P) and used the
loan application and REM for the company to pay off his debts instead. Now
Uy and co are suing for damages/annulment of the REM. There was an
estafa case but the Court itself said the records dont show what happened
there. TC Ruled IFO KLII, CA Reversed. Went up to SC but Loreta brought up
the defective certificate of non-forum shopping since no proof that the
company authorized its president to sign (Rule is that authorization requires
proof). SC Said yes correct but coz of the merits of this case, theyll relax
the rules.

DOCTRINE GENERAL RULE: In case of a corporation, it has long been settled that the
certificate [of non-forum shopping] must be signed for and on its behalf by a
specifically authorized officer or agent who has personal knowledge of the facts
required to be disclosed.

Consequently, without the needed proof from the board of directors, the certificate
would be considered defective. Thus, xxx even the regular officers of a corporation,
like the chairman and president, may not even know the details required in a
certificate of non-forum shopping; they must therefore be authorized by the board of
directors just like any other officer or agent

Merits of the petition justify relaxing of the rules in this case

FACTS bullet points

Loreta Uy (R) filed, complaint for annulment of real estate mortgage and related
documents plus damages against (P) Kaunlaran Lending Investors, Inc. (KLII)
and Lelia Chua Sy (Lelia), along with Wilfredo Chua (Wilfredo) and Magno Zareno
(Magno) at RTC Dagupan City
BACKGROUND OF THE CASE/WHAT UY ALLEGED:
o Her son Jose, nephew Virgilio and Wilfredo agreed to establish a business
of buy-and-sell of 2nd hand motor vehicles Virgilio as manager, Wilfredo
will scout for financier, Jose would provide security for the loan
o Wilfredo got Lelia, Branch Manager of Far East Bank and Trust Co in
Dagupan who was allegedly the owner of the controlling interest in KLII to
agree to grant a loan.
o Wilfredo then asked Jose who in turn got Loreta to issue a Special Power of
Attorney to turn over land titles to 2 parcels of land in QC as security for
the loan.
o (Detailed continuation in the Notes section in the bottom in case sir asks)
Essentially, what happened here is that Wilfredo got Loreta to sign loan
forms supposedly for the company. While Jose and Virgilio were scouting
 prices of their target market in Manila, Magno went to Loreta to sign some
more loan forms eventually they found out the loan applications were
used instead to pay off Wilfredos debt to Lelia. AKA the solidbank check,
loan applications, REM were all fraudulent transactions
BACK TO PRESENT: Loreta prayed for annulment + damages and also filed a
criminal complaint vs Magno, Wilfredo, and Lelia for Estafa at RTC Dagupan City
Answer w/ Counterclaim:
o LELIA: prayed for damages + denied being owner of controlling interest in
KLII, only lessor of building where KLII has its office + denied the P800k
loan
The complaint is baseless and false, maliciously instigated by Jose to
harass her coz she rejected his loan application and request to
restructure his loan account w/ KLII
o WILFREDO: only introduced Jose to Lelia as co-maker of loan application,
said it was Jose who went to Loreta NOT him
o KLII/MAGNO: the promissory note and REM were signed in the presence of
Magno, Atty. Gaudiz and other employees would not grant restructuring
of Joses loan unless he paid 50% of his overdue account w/c he failed so
KLII foreclosed the mortgage
RTC ruled IFO KLII: no iota of evidence that Lelia and Wilfredo conspired
o Lelia just lessor of KLII, Board of KLII were other people
o Solidbank check never encashed
o Evidence is clear that Loreta and Wilfredo actually received the 800k cash
from KLII what happened after is unclear SO ONLY WILFREDO LIABLE
ALL PARTIES APPEALED (except Magno who died) KLII just wanted damages
awarded to it
CA: REVERSED declared REM and documents null and void, MR DENIED
Present petition to SC (not stated but cites GAOD so R65 siguro)
ITO ATA IMPORTANT PART: Loreta MTD coz defective verification and
certificate of non-forum shopping
o For failure of KLII to present proof that its president, Rolando Tan, was
authorized to sign the verification and certificate of non-forum shopping
on its behalf, the petition must be denied
o KLII ARGUMENT: certification was made by the President, who is given
general supervision and control as chief executive officer from which [it] is
to be inferred that contracts or acts done by the President in the ordinary
course of business are presumed to be duly authorized, unless the
contrary appears. In fact the by-laws of the Petitioner KLI[I] xxx gives him
that authority.

ISSUE state all issues first. Bold the one related to the subject
1. WON case should be dismissed for the defective verification and
certificate of non-forum shopping? NO

RATIO Bold important words or phrases

WON case should be dismissed for the defective verification and certificate
of non-forum shopping? NO
 [SUBJECTCivPro] | [TOPIC Formal Requirements of Pleadings] 3
[Digest maker Kyle Subido]

GENERAL RULE: In case of a corporation, it has long been settled that the
certificate [of non-forum shopping] must be signed for and on its behalf by a
specifically authorized officer or agent who has personal knowledge of the facts
required to be disclosed.

Consequently, without the needed proof from the board of directors, the
certificate would be considered defective. Thus, xxx even the regular officers of
a corporation, like the chairman and president, may not even know the details
required in a certificate of non-forum shopping; they must therefore be
authorized by the board of directors just like any other officer or agent
Merits of the petition justify relaxing of the rules
From a review of the records Loreta has not proven by preponderance of
evidence that she was deceived into signing the documents required for the
release of the proceeds of the loan
o CA credited testimony of Magno as hostile witness for Loreta WHICH WAS
THE OPPOSITE OF WHAT TC DID
Offered no reason why they did this
Doctrine that findings of the Trial court are entitled to respect absent
any cogent/strong reason to the contrary
In addition, Magnos testimony should be received w/ caution coz it
contradicts his earlier counter-affidavit [C]ourts do not generally
look with favor on any retraction or recanted testimony, for it could
have been secured by considerations other than to tell the truth and
would make solemn trials a mockery and place the investigation of
the truth at the mercy of unscrupulous witnesses. A recantation
does not necessarily cancel an earlier declaration, but like any other
testimony the same is subject to the test of credibility and should be
received with caution

DECISION bullet points. Dont copy and paste

Petition GRANTED. RTC DECISION REINSTATED.

NOTES:
o These documents were entrusted to Wilfredo who delivered such to Lelia
Lelia then sent Jose to Manila together with a certain Ed and Doc of KLII
to appraise the land
o Wilfredo had Loreta then sign loan forms: 1) promissory note he pre-
signed as co-maker 2) REM 3) loan disclosure
o Jose and Virgilio then went to Manila to canvass 2nd-hand vehicle prices
while there, Magno, manager of KLII went to Loretas residence w/ the
forms previously signed + some more loan forms and a Solidbank check.
explained in presence of Joses wife that the new loan forms would be
sent to Manila and that the proceeds of the loan would be promptly
delivered to her residence once she affixes her signature on the said
check and voucher.
o Jose confronted Magno about this and was told that it was Lelias
instructions when they tried to withdraw the loan applications and
 titles, Lelia told them it was not possible at a later conference, Lelia
admitted applying the P800k loan proceeds to Wilfredos debt to her
o Later verified at Register of Deeds that the REM in favor of KLII for P800k
was annotated on Loretas titles the copy of the document bore only
Loretas signature and was notarized w/o her
o So they sent telegrams to KLII to set aside the transaction/deny the
registration of the mortgage

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