Penta Capital Vs Mahinay

SUPREME COURT REPORTS ANNOTATED VOLUME 623 13/12/2017, 9*46 PM
G.R. No. 171736. July 5, 2010.*
PENTACAPITAL INVESTMENT CORPORATION,

petitioner, vs. MAKILITO B. MAHINAY, respondent.
G.R. No. 181482. July 5, 2010.*
PENTACAPITAL INVESTMENT CORPORATION,

petitioner, vs. MAKILITO B. MAHINAY, respondent.
Actions; Pleadings and Practice; Supplemental Pleadings; As a

general rule, leave will be granted to a party who desires to file a
supplemental pleading that alleges any material fact which
happened or came within the partyÊs knowledge after the original
pleading was filed, such being the office of a supplemental pleading.
·As a general rule, leave will be granted to a party who desires to
file a supplemental pleading that alleges any material fact which
happened or came within the partyÊs knowledge after the original
pleading was filed, such being the office of a supplemental pleading.
The application of the rule would ensure that the entire controversy
might be settled in one action, avoid unnecessary repetition of effort
and unwarranted expense of litigants, broaden the scope of the
issues in an action owing to the light thrown on it by facts, events
and occurrences which have accrued after the filing of the original
pleading, and bring into record the facts enlarging or charging the
kind of relief to which plaintiff is entitled. It is the policy of the law
to grant relief as far as possible for wrongs complained of, growing
out of the same transaction and thus put an end to litigation.
Same; Same; Same; Supplemental pleadings must state
transactions, occurrences or events which took place since the time
the pleading sought to be supplemented was filed.·Given these
premises, it is obvious that the alleged obligation of petitioner
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already existed and was known to respondent at the time of the

filing of his Answer with Counterclaim. He should have demanded
payment of his commission and share in the proceeds of the sale in
that Answer with Compulsory Counterclaim, but he did not. He is,
therefore, proscribed from incorporating the same and making such
demand
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* SECOND DIVISION.
285
VOL. 623, JULY 5, 2010 285
Pentacapital Investment Corporation vs. Mahinay
via a supplemental pleading. The supplemental pleading must be

based on matters arising subsequent to the filing of the original
pleading related to the claim or defense presented therein, and
founded on the same cause of action. Supplemental pleadings must
state transactions, occurrences or events which took place since the
time the pleading sought to be supplemented was filed.
Contracts; Loans; Like any other contract, a contract of loan is
subject to the rules governing the requisites and validity of contracts
in general.·To ascertain whether or not respondent is bound by the
promissory notes, it must be established that all the elements of a
contract of loan are present. Like any other contract, a contract of
loan is subject to the rules governing the requisites and validity of
contracts in general. It is elementary in this jurisdiction that what
determines the validity of a contract, in general, is the presence of
the following elements: (1) consent of the contracting parties; (2)
object certain which is the subject matter of the contract; and (3)
cause of the obligation which is established.
Same; Evidence; Presumptions; Burden of Proof; The effect of a
legal presumption upon a burden of proof is to create the necessity of
presenting evidence to meet the legal presumption or the prima facie
case created thereby, and which, if no proof to the contrary is
presented and offered, will prevail·the burden of proof remains
where it is, but by the presumption, the one who has that burden is
relieved for the time being from introducing evidence in support of

the averment, because the presumption stands in the place of
evidence unless rebutted.·Under Article 1354 of the Civil Code, it is
presumed that consideration exists and is lawful unless the debtor
proves the contrary. Moreover, under Section 3, Rule 131 of the
Rules of Court, the following are disputable presumptions: (1)
private transactions have been fair and regular; (2) the ordinary
course of business has been followed; and (3) there was sufficient
consideration for a contract. A presumption may operate against an
adversary who has not introduced proof to rebut it. The effect of a
legal presumption upon a burden of proof is to create the necessity
of presenting evidence to meet the legal presumption or the prima
facie case created thereby, and which, if no proof to the contrary is
presented and offered, will prevail. The burden of proof remains
where it is, but by the presumption, the one who has that burden is
relieved for the time being from introducing evidence in support of
the averment, because the presumption stands in the place of
evidence unless rebutted.
286
286 SUPREME COURT REPORTS ANNOTATED
Same; Same; Same; The presumption that a contract has

sufficient consideration cannot be overthrown by the bare,
uncorroborated and self-serving assertion of respondent that it has
no consideration·the alleged lack of consideration must be shown
by preponderance of evidence.·In the present case, as proof of his
claim of lack of consideration, respondent denied under oath that he
owed petitioner a single centavo. He added that he did not apply for
a loan and that when he signed the promissory notes, they were all
blank forms and all the blank spaces were to be filled up only if the
sale transaction over the subject properties would not push through
because of a possible adverse decision in the civil cases involving
them (the properties). He thus posits that since the sale pushed
through, the promissory notes did not become effective. Contrary to
the conclusions of the RTC and the CA, we find such proof
insufficient to overcome the presumption of consideration. The
presumption that a contract has sufficient consideration cannot be
overthrown by the bare, uncorroborated and self-serving assertion
of respondent that it has no consideration. The alleged lack of

consideration must be shown by preponderance of evidence.
Same; Attorneys; A party who is not only a lawyer but a law
professor as well is legally presumed not only to exercise vigilance
over his concerns but, more importantly, to know the legal and
binding effects of promissory notes and the intricacies involving the
execution of negotiable instruments including the need to execute an
agreement to document extraneous collateral conditions and/or
agreements, if truly there were such.·As it now appears, the
promissory notes clearly stated that respondent promised to pay
petitioner P1,520,000.00 and P416,800.00, plus interests and
penalty charges, a year after their execution. Nowhere in the notes
was it stated that they were subject to a condition. As correctly
observed by petitioner, respondent is not only a lawyer but a law
professor as well. He is, therefore, legally presumed not only to
exercise vigilance over his concerns but, more importantly, to know
the legal and binding effects of promissory notes and the intricacies
involving the execution of negotiable instruments including the
need to execute an agreement to document extraneous collateral
conditions and/or agreements, if truly there were such. This
militates against respondentÊs claim that there was indeed such an
agreement. Thus, the promissory notes should be accepted as they
appear on their face.
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VOL. 623, JULY 5, 2010 287
Same; Loans; Promissory Notes; A promissory note is a solemn

acknowledgment of a debt and a formal commitment to repay it on
the date and under the conditions agreed upon by the borrower and
the lender.·In Sierra v. Court of Appeals, 211 SCRA 785 (1992), we
held that: A promissory note is a solemn acknowledgment of a debt
and a formal commitment to repay it on the date and under the
conditions agreed upon by the borrower and the lender. A person
who signs such an instrument is bound to honor it as a legitimate
obligation duly assumed by him through the signature he affixes
thereto as a token of his good faith. If he reneges on his promise
without cause, he forfeits the sympathy and assistance of this Court
and deserves instead its sharp repudiation.

Same; Same; Interests; An interest rate of 25% from February
17, 1997 until fully paid is excessive and thus, void.·Aside from the
payment of the principal obligation of P1,936,800.00, the parties
agreed that respondent pay interest at the rate of 25% from
February 17, 1997 until fully paid. Such rate, however, is excessive
and thus, void. Since the stipulation on the interest rate is void, it is
as if there was no express contract thereon. To be sure, courts may
reduce the interest rate as reason and equity demand. In this case,
12% interest is reasonable.
Same; Same; Penalty Clauses; A penalty charge of 3% per
month is unconscionable.·The promissory notes likewise required
the payment of a penalty charge of 3% per month or 36% per
annum. We find such rates unconscionable. This Court has
recognized a penalty clause as an accessory obligation which the
parties attach to a principal obligation for the purpose of ensuring
the performance thereof by imposing on the debtor a special
prestation (generally consisting of the payment of a sum of money)
in case the obligation is not fulfilled or is irregularly or
inadequately fulfilled. However, a penalty charge of 3% per month
is unconscionable; hence, we reduce it to 1% per month or 12% per
annum, pursuant to Article 1229 of the Civil Code which states:
Art. 1229. The judge shall equitably reduce the penalty when the
principal obligation has been partly or irregularly complied with by
the debtor. Even if there has been no performance, the penalty may
also be reduced by the courts if it is iniquitous or unconscionable.
288
Same; Same; AttorneyÊs Fees; Courts are empowered to reduce

attorneyÊs fees if the same are iniquitous or unconscionable.·
Respondent promised to pay 25% of his outstanding obligations as
attorneyÊs fees in case of non-payment thereof. AttorneyÊs fees here
are in the nature of liquidated damages. As long as said stipulation
does not contravene law, morals, or public order, it is strictly
binding upon respondent. Nonetheless, courts are empowered to
reduce such rate if the same is iniquitous or unconscionable
pursuant to the above-quoted provision. This sentiment is echoed in

Article 2227 of the Civil Code, to wit: Art. 2227. Liquidated
damages, whether intended as an indemnity or a penalty, shall be
equitably reduced if they are iniquitous or unconscionable. Hence,
we reduce the stipulated attorneyÊs fees from 25% to 10%.
Judgments; Res Judicata; Requisites; Words and Phrases; Res
judicata means a matter adjudged · a thing judicially acted upon
or decided, or a thing or matter settled by judgment.·Res judicata
means „a matter adjudged; a thing judicially acted upon or decided;
a thing or matter settled by judgment.‰ It lays the rule that an
existing final judgment or decree rendered on the merits, without
fraud or collusion, by a court of competent jurisdiction, upon any
matter within its jurisdiction, is conclusive of the rights of the
parties or their privies, in all other actions or suits in the same or
any other judicial tribunal of concurrent jurisdiction on the points
and matters in issue in the first suit. The requisites of res judicata
are: (1) The former judgment or order must be final; (2) It must be a
judgment on the merits; (3) It must have been rendered by a court
having jurisdiction over the subject matter and the parties; and (4)
There must be between the first and second actions, identity of
parties, subject matter, and cause of action.
Same; Same; It is well-settled that when material facts or
questions in issue in a former action were conclusively settled by a
judgment rendered therein, such facts or questions constitute res
judicata and may not again be litigated in a subsequent action
between the same parties or their privies regardless of the form of the
latter.·It is well-settled that when material facts or questions in
issue in a former action were conclusively settled by a judgment
rendered therein, such facts or questions constitute res judicata and
may not again be litigated in a subsequent action between the same
parties or their privies regardless of the form of the latter. Absolute
identity of par-
289
VOL. 623, JULY 5, 2010 289
ties is not required, and where a shared identity of interest is

shown by the identity of the relief sought by one person in a prior
case and the second person in a subsequent case, such was deemed
sufficient. There is identity of parties not only when the parties in
the cases are the same, but also between those in privity with them.
Same; Same; Doctrine of Immutability; No other procedural law
principle is indeed more settled than that once a judgment becomes
final, it is no longer subject to change, revision, amendment, or
reversal, except only for correction of clerical errors, or the making of
nunc pro tunc entries which cause no prejudice to any party, or
where the judgment itself is void.·No other procedural law
principle is indeed more settled than that once a judgment becomes
final, it is no longer subject to change, revision, amendment, or
reversal, except only for correction of clerical errors, or the making
of nunc pro tunc entries which cause no prejudice to any party, or
where the judgment itself is void. The underlying reason for the
rule is two-fold: (1) to avoid delay in the administration of justice
and thus make orderly the discharge of judicial business; and (2) to
put judicial controversies to an end, at the risk of occasional errors,
inasmuch as controversies cannot be allowed to drag on indefinitely
and the rights and obligations of every litigant must not hang in
suspense for an indefinite period of time.
Pleadings and Practice; Forum Shopping; Words and Phrases;
What is important in determining whether forum-shopping exists is
the vexation caused the courts and parties-litigants by a party who
asks different courts and/or administrative agencies to rule on the
same or related causes and/or grant the same or substantially the
same reliefs, in the process creating the possibility of conflicting
decisions being rendered by the different fora upon the same issues.
· Forum-shopping is the act of a litigant who repetitively availed of
several judicial remedies in different courts, simultaneously or
successively, all substantially founded on the same transactions and
the same essential facts and circumstances, and all raising
substantially the same issues, either pending in or already resolved
adversely by some other court, to increase his chances of obtaining a
favorable decision if not in one court, then in another. What is
important in determining whether forum-shopping exists is the
vexation caused the courts and parties-litigants by a party who asks
different courts and/or administrative agencies to rule on the same
or related causes
290
and/or grant the same or substantially the same reliefs, in the pro-
cess creating the possibility of conflicting decisions being rendered
by the different fora upon the same issues.
Same; Same; Three Ways of Committing Forum Shopping.·
Forum-shopping can be committed in three ways: (1) by filing
multiple cases based on the same cause of action and with the same
prayer, the previous case not having been resolved yet (where the
ground for dismissal is litis pendentia); (2) by filing multiple cases
based on the same cause of action and with the same prayer, the
previous case having been finally resolved (where the ground for
dismissal is res judicata); and (3) by filing multiple cases based on
the same cause of action but with different prayers (splitting of
causes of action, where the ground for dismissal is also either litis
pendentia or res judicata).
Same; Same; There is no forum shopping where the first case
originated from an interlocutory order of the Regional Trial Court
(RTC), while the second case is an appeal from the decision of the
court on the merits of the case.·More particularly, the elements of
forum-shopping are: (a) identity of parties or at least such parties
that represent the same interests in both actions; (b) identity of
rights asserted and reliefs prayed for, the relief being founded on
the same facts; (c) identity of the two preceding particulars, such
that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action
under consideration. These elements are not present in this case. In
G.R. No. 171736, petitioner assails the propriety of the admission of
respondentÊs supplemental compulsory counterclaim; while in G.R.
No. 181482, petitioner assails the grant of respondentÊs
supplemental compulsory counterclaim. In other words, the first
case originated from an interlocutory order of the RTC, while the
second case is an appeal from the decision of the court on the merits
of the case. There is, therefore, no forum-shopping for the simple
reason that the petition and the appeal involve two different and
distinct issues.
PETITIONS for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
291
VOL. 623, JULY 5, 2010 291

Solis, Medina, Limpengco & Fajardo Law Offices for

petitioner.
Makilito B. Mahinay for and in his own behalf.
NACHURA, J.:
Before us are two consolidated petitions for review on
certiorari under Rule 45 of the Rules of Court filed by
petitioner Pentacapital Investment Corporation. In G.R.
No. 171736, petitioner assails the Court of Appeals (CA)
Decision1 dated December 20, 2005 and Resolution2 dated
March 1, 2006 in CA-G.R. SP No. 74851; while in G.R. No.
181482, it assails the CA Decision3 dated October 4, 2007
and Resolution4 dated January 21, 2008 in CA-G.R. CV No.
86939.
The Facts
Petitioner filed a complaint for a sum of money against

respondent Makilito Mahinay based on two separate loans
obtained by the latter, amounting to P1,520,000.00 and
P416,800.00, or a total amount of P1,936,800.00. These
loans were evidenced by two promissory notes5 dated
February 23, 1996. Despite repeated demands, respondent
failed to pay the loans, hence, the complaint.6
In his Answer with Compulsory Counterclaim,7
respondent claimed that petitioner had no cause of action
because the
_______________
1 Penned by Associate Justice Mario L. Guariña III, with Associate

Justices Roberto A. Barrios and Santiago Javier Ranada, concurring;
Rollo (G.R. No. 171736), pp. 75-82.
2 Id., at p. 84.
3 Penned by Associate Justice Jose L. Sabio, Jr., with Associate
Justices Noel G. Tijam and Myrna Dimaranan Vidal, concurring; Rollo
(G.R. No. 181482), pp. 114-142.
4 Id., at pp. 99-100.

5 Rollo (G.R. No. 181482), pp. 155-157.
6 Id., at pp. 171-174.
7 Id., at pp. 175-185.
292

promissory notes on which its complaint was based were

subject to a condition that did not occur.8 While admitting
that he indeed signed the promissory notes, he insisted
that he never took out a loan and that the notes were not
intended to be evidences of indebtedness.9 By way of
counterclaim, respondent prayed for the payment of moral
and exemplary damages plus attorneyÊs fees.10
Respondent explained that he was the counsel of Ciudad
Real Development Inc. (CRDI). In 1994, Pentacapital
Realty Corporation (Pentacapital Realty) offered to buy
parcels of land known as the Molino Properties, owned by
CRDI, located in Molino, Bacoor, Cavite. The Molino
Properties, with a total area of 127,708 square meters,
were sold at P400.00 per sq m. As the Molino Properties
were the subject of a pending case, Pentacapital Realty
paid only the down payment amounting to P12,000,000.00.
CRDI allegedly instructed Pentacapital Realty to pay the
formerÊs creditors, including respondent who thus received
a check worth P1,715,156.90.11 It was further agreed that
the balance would be payable upon the submission of an
Entry of Judgment showing that the case involving the
Molino Properties had been decided in favor of CRDI.12
Respondent, Pentacapital Realty and CRDI allegedly
agreed that respondent had a charging lien equivalent to
20% of the total consideration of the sale in the amount of
P10,277,040.00. Pending the submission of the Entry of
Judgment and as a sign of good faith, respondent
purportedly returned the P1,715,156.90 check to
Pentacapital Realty. However, the Molino Properties
continued to be haunted by the seemingly interminable
court actions initiated by differ-
_______________
8 Id., at p. 176.
9 Id., at p. 119.
10 Id., at p. 183.
11 Id., at p. 120.
12 Id., at pp. 176-177.
293
VOL. 623, JULY 5, 2010 293

ent parties which thus prevented respondent from

collecting his commission.
On motion13 of respondent, the Regional Trial Court
(RTC) allowed him to file a Third Party Complaint14
against CRDI, subject to the payment of docket fees.15
Admittedly, respondent earlier instituted an action for
Specific Performance against Pentacapital Realty before
the RTC of Cebu City, Branch 57, praying for the payment
of his commission on the sale of the Molino Properties.16 In
an Amended Complaint,17 respondent referred to the action
he instituted as one of Preliminary Mandatory Injunction
instead of Specific Performance. Acting on Pentacapital
RealtyÊs Motion to Dismiss, the RTC dismissed the case for
lack of cause of action.18 The dismissal became final and
executory.
With the dismissal of the aforesaid case, respondent
filed a Motion to Permit Supplemental Compulsory
Counterclaim.19 In addition to the damages that
respondent prayed for in his compulsory counterclaim, he
sought the payment of his commission amounting to
P10,316,640.00, plus interest at the rate of 16% per annum,
as well as attorneyÊs fees equivalent to 12% of his principal
claim.20 Respondent claimed that Pentacapital Realty is a
100% subsidiary of petitioner. Thus, although petitioner did
not directly participate in the transaction between
Pentacapital Realty, CRDI and respondent, the latterÊs
claim against petitioner was based on the doctrine of
piercing the veil of corporate fiction. Simply stated,
respondent alleged that petitioner and Pentacapital Realty
are one
_______________
13 Id., at pp. 208-212.

14 Id., at pp. 213-216.
15 Id., at pp. 217-218.
16 Id., at pp. 158-161.
17 Id., at pp. 162-167.
18 Id., at pp. 168-170.
19 Id., at pp. 219-223.
20 Id., at p. 226.
294

and the same entity belonging to the Pentacapital Group of

Companies.21
Over the opposition of petitioner, the RTC, in an Order22
dated August 22, 2002, allowed the filing of the
supplemental counterclaim. Aggrieved, petitioner sought
recourse in the CA through a special civil action for
certiorari, seeking to reverse and set aside the RTC Order.
The case was docketed as CA-G.R. SP No. 74851. On
December 20, 2005, the CA rendered the assailed Decision
dismissing the petition.23 The appellate court sustained the
allowance of the supplemental compulsory counterclaim
based on the allegations in respondentÊs pleading. The CA
further concluded that there was a logical relationship
between the claims of petitioner in its complaint and those
of respondent in his supplemental compulsory
counterclaim. The CA declared that it was inconsequential
that respondent did not clearly allege the facts required to
pierce the corporate separateness of petitioner and its
subsidiary, the Pentacapital Realty.24
Petitioner now comes before us in G.R. No. 171736,
raising the following issues:
A.
WHETHER RESPONDENT MAHINAY IS BARRED FROM
ASSERTING THE CLAIM CONTAINED IN HIS

„SUPPLEMENTAL COMPULSORY COUNTERCLAIM‰ ON THE
GROUNDS OF (1) RES JUDICATA, (2) WILLFUL AND
DELIBERATE FORUM SHOPPING, AND (3) FAILURE TO
INTERPOSE SUCH CLAIM ON TIME PURSUANT TO SECTION
2 OF RULE 9 OF THE RULES OF COURT;
_______________
21 Id., at pp. 224-227.

22 Id., at pp. 238-239.
23 Supra note 1.
24 Rollo (G.R. No. 171736), pp. 79-82.
295
VOL. 623, JULY 5, 2010 295

B.
WHETHER RESPONDENT MAHINAYÊS SUPPLEMENTAL
COMPULSORY COUNTERCLAIM IS ACTUALLY A THIRD-
PARTY COMPLAINT AGAINST PENTACAPITAL REALTY, THE
INTRODUCTION OF WHICH REQUIRES THE PAYMENT OF
THE NECESSARY DOCKET FEES;
C.
ASSUMING FOR THE SAKE OF PURE ARGUMENT THAT IT
IS PROPER TO PIERCE THE CORPORATE VEIL AND TO
ALLOW RESPONDENT MAHINAY TO LODGE A
„SUPPLEMENTAL COMPULSORY COUNTERCLAIM‰ AGAINST
HEREIN PETITIONER PENTACAPITAL INVESTMENT FOR AN
ALLEGED OBLIGATION OF ITS SUBSIDIARY, PENTACAPITAL
REALTY, ON THE THEORY THAT THEY ARE „ONE AND THE
SAME COMPANY,‰ WHETHER PENTACAPITAL REALTY
SHOULD HAVE AT LEAST BEEN MADE A PARTY TO THE
CASE AS RULED BY THIS HONORABLE COURT IN FILMERCO
COMMERCIAL CO., INC. VS. INTERMEDIATE APPELLATE
COURT;
D.
WHETHER RESPONDENT MAHINAY SHOULD BE
ALLOWED TO PRESENT EVIDENCE ON HIS SO-CALLED
„SUPPLEMENTAL COMPULSORY COUNTERCLAIM‰
INASMUCH AS (1) RESPONDENT MAHINAYÊS PLEADINGS

ARE BEREFT OF ANY ALLEGATIONS TO BUTTRESS THE
MERGING OF PENTACAPITAL REALTY AND PENTACAPITAL
INVESTMENT INTO ONE ENTITY AND THE CONSEQUENT
IMPUTATION ON THE LATTER OF THE FORMERÊS SUPPOSED
LIABILITY ON RESPONDENT MAHINAYÊS SUPPLEMENTAL
COMPULSORY COUNTERCLAIM, AND (2) THE INCIDENTS
ALLEGEDLY PERTAINING TO, AND WHICH WOULD
THEREBY SUPPORT, THE PIERCING OF CORPORATE VEIL
ARE NOT EVIDENTIARY MATTERS MATERIAL TO THE
PROCEEDINGS BEFORE THE COURT A QUO CONSIDERING
THAT THE SAME ARE BEYOND THE SCOPE OF THE
PLEADINGS;
E.
WHETHER THE DOCTRINE OF PIERCING THE
CORPORATE VEIL MAY BE INVOKED AND APPLIED IN
ORDER TO
296

EVADE AN OBLIGATION AND FACILITATE PROCEDURAL

WRONGDOING; AND
F.
WHETHER PETITIONER PENTACAPITAL INVESTMENT
COMMITTED FORUM SHOPPING WHEN IT FILED THE
PRESENT PETITION DURING THE PENDENCY OF THE
MOTION FOR RECONSIDERATION IT FILED BEFORE THE
COURT A QUO AND, SUBSEQUENTLY, OF THE APPEAL
BEFORE THE COURT OF APPEALS TO QUESTION THE
JUDGMENT OF THE COURT A QUO.25
There being no writ of injunction or Temporary

Restraining Order (TRO), the proceedings before the RTC
continued and respondent was allowed to present his
evidence on his supplemental compulsory counterclaim.
After trial on the merits, the RTC rendered a decision26
dated March 20, 2006, the dispositive portion of which
reads:
„WHEREFORE, PREMISES CONSIDERED, plaintiff Ês complaint is
hereby ordered dismissed for lack of merit. This court, instead, finds that
defendant was able to prove by a clear preponderance of evidence his
cause of action against plaintiff as to defendantÊs compulsory and
supplemental counterclaims. That, therefore, this court hereby orders
the plaintiff to pay unto defendant the following sums, to wit:
1. P1,715,156.90 representing the amount plaintiff is obligated to
pay defendant as provided for in the deed of sale and the
supplemental agreement, plus interest at the rate of 16% per
annum, to be computed from September 23, 1998 until the said
amount shall have been fully paid;
2. Php 10,316,640.00 representing defendantÊs share of the proceeds
of the sale of the Molino property (defendantÊs charging lien) plus
interest at the rate of 16% per annum, to be computed from
September 23, 1998 until the said amount shall have been fully
paid;
_______________
25 Id., at pp. 459-460.

26 Penned by Judge Maria Rosario B. Ragasa, Rollo (G.R. No.
181482), pp. 311-323.
297
VOL. 623, JULY 5, 2010 297

3. Php 50,000.00 as attorneyÊs fees based on quantum meruit;

4. Php 50,000.00 litigation expenses, plus costs of suit.
This court finds it unnecessary to rule on the third party complaint,
the relief prayed for therein being dependent on the possible award by
this court of the relief of plaintiff Ês complaint.‰27
On appeal, the CA, in CA-G.R. CV No. 86939, affirmed

in toto the above decision. The CA found no basis for
petitioner to collect the amount demanded, there being no
perfected contract of loan for lack of consideration.28 As to
respondentÊs supplemental compulsory counterclaim,
quoting the findings of the RTC, the appellate court held
that respondent was able to prove by preponderance of
evidence that it was the intent of Pentacapital Group of
Companies and CRDI to give him P10,316,640.00 and
P1,715,156.90.29 The CA likewise affirmed the award of

interest at the rate of 16% per annum, plus damages.30
Unsatisfied, petitioner moved for reconsideration of the
aforesaid Decision, but it was denied in a Resolution31
dated January 21, 2008. Hence, the present petition in G.R.
No. 181482, anchored on the following arguments:
A.
Considering that the inferences made in the present case are
manifestly absurd, mistaken or impossible, and are even contrary to
the admissions of respondent Mahinay, and inasmuch as the
judgment is premised on a misapprehension of facts, this Honorable
Court may validly take cognizance of the errors relative to the
findings of fact of both the Honorable Court of Appeals and the
court a quo.
_______________
27 Id., at pp. 322-323.

28 Rollo (G.R. No. 181482), p. 133.
29 Id., at pp. 137-139.
30 Id., at pp. 140-141.
31 Supra note 4.
298

B.
Respondent Mahinay is liable to petitioner PentaCapital
Investment for the PhP1,936,800.00 loaned to him as well as for
damages and attorneyÊs fees.
1.
The Honorable Court of Appeals erred in concluding that
respondent Mahinay failed to receive the money he borrowed
when there is not even any dispute as to the fact that
respondent Mahinay did indeed receive the PhP1,936,800.00
from petitioner PentaCapital Investment.
2.
The Promissory Notes executed by respondent Mahinay
are valid instruments and are binding upon him.
C.
Petitioner PentaCapital Investment cannot be held liable on the

supposed „supplemental compulsory counterclaim‰ of respondent
Mahinay.
1.
The findings of fact as well as the conclusions arrived at by
the Court of Appeals in its decision were based on mistaken
assumptions and on erroneous appreciation of the evidence on
record.
2.
There is no evidence on record to support the merging of
PentaCapital Realty and petitioner PentaCapital Investment
into one entity and the consequent imputation on the latter of
the formerÊs supposed liability on respondent MahinayÊs
supplemental compulsory counterclaim.
3.
Inasmuch as the claim of respondent Mahinay is
supposedly against PentaCapital Realty, and considering that
petitioner PentaCapital Investment is a separate, distinct
entity from PentaCapital Realty, the latter should have been
impleaded as it is an indispensable party.
299
VOL. 623, JULY 5, 2010 299

D.
Assuming for the sake of pure argument that it is proper to
disregard the corporate fiction and to consider herein petitioner
PentaCapital Investment and its subsidiary, PentaCapital Realty,
as one and the same entity, respondent MahinayÊs „supplemental
compulsory counterclaim‰ must still necessarily fail.
1.
The cause of action of respondent Mahinay, as contained in
his „supplemental compulsory counterclaim,‰ is already
barred by a prior judgment (res judicata).
2.
Considering that the dismissal on the merits by the RTC
Cebu of respondent MahinayÊs complaint against
PentaCapital Realty for attorneyÊs fees has attained finality,
respondent Mahinay committed a willful act of forum
shopping when he interposed the exact same claim in the
proceedings a quo as a supposed supplemental compulsory

counterclaim against what he claims to be „one and the same‰
company.
3.
Respondent MahinayÊs supplemental compulsory
counterclaim is actually a third party complaint against
PentaCapital Realty; the filing thereof therefore requires the
payment of the necessary docket fees.
E.
The doctrine of piercing the corporate veil is an equitable remedy
which cannot and should not be invoked, much less applied, in
order to evade an obligation and facilitate procedural
wrongdoing.32
Simply put, the issues for resolution are: 1) whether the

admission of respondentÊs supplemental compulsory
counterclaim is proper; 2) whether respondentÊs
counterclaim is barred by res judicata; and (3) whether
petitioner is guilty of forum-shopping.
_______________
32 Rollo (G.R. No. 181482), pp. 40-43.
300

The CourtÊs Ruling
Admission of RespondentÊs
Supplemental Compulsory Counterclaim
The pertinent provision of the Rules of Court is Section 6
of Rule 10, which reads:
„Sec. 6. Supplemental pleadings.·Upon motion of a party, the

court may, upon reasonable notice and upon such terms as are just,
permit him to serve a supplemental pleading setting forth
transactions, occurrences or events which have happened since the
date of the pleading sought to be supplemented. The adverse party
may plead thereto within ten (10) days from notice of the order
admitting the supplemental pleading.‰
As a general rule, leave will be granted to a party who

desires to file a supplemental pleading that alleges any
material fact which happened or came within the partyÊs
knowledge after the original pleading was filed, such being
the office of a supplemental pleading. The application of
the rule would ensure that the entire controversy might be
settled in one action, avoid unnecessary repetition of effort
and unwarranted expense of litigants, broaden the scope of
the issues in an action owing to the light thrown on it by
facts, events and occurrences which have accrued after the
filing of the original pleading, and bring into record the
facts enlarging or charging the kind of relief to which
plaintiff is entitled. It is the policy of the law to grant relief
as far as possible for wrongs complained of, growing out of
the same transaction and thus put an end to litigation.33
In his Motion to Permit Supplemental Compulsory
Counterclaim, respondent admitted that, in his Answer
with Compulsory Counterclaim, he claimed that, as one of
the corporations composing the Pentacapital Group of
Companies, peti-
_______________
33 Lambino v. Presiding Judge, RTC, Br. 172, Valenzuela City, G.R.

No. 169551, January 24, 2007, 512 SCRA 525, 539-540.
301
VOL. 623, JULY 5, 2010 301

tioner is liable to him for P10,316,640.00, representing 20%

attorneyÊs fees and share in the proceeds of the sale
transaction between Pentacapital Realty and CRDI. In the
same pleading, he further admitted that he did not include
this amount in his compulsory counterclaim because he
had earlier commenced another action for the collection of
the same amount against Pentacapital Realty before the
RTC of Cebu. With the dismissal of the RTC-Cebu case,
there was no more legal impediment for respondent to file
the supplemental counterclaim.

Moreover, in his Answer with Compulsory Counterclaim,
respondent already alleged that he demanded from
Pentacapital Group of Companies to which petitioner
supposedly belongs, the payment of his 20% commission.
This, in fact, was what prompted respondent to file a
complaint before the RTC-Cebu for preliminary mandatory
injunction for the release of the said amount.
Given these premises, it is obvious that the alleged
obligation of petitioner already existed and was known to
respondent at the time of the filing of his Answer with
Counterclaim. He should have demanded payment of his
commission and share in the proceeds of the sale in that
Answer with Compulsory Counterclaim, but he did not. He
is, therefore, proscribed from incorporating the same and
making such demand via a supplemental pleading. The
supplemental pleading must be based on matters arising
subsequent to the filing of the original pleading related to
the claim or defense presented therein, and founded on the
same cause of action.34 Supplemental pleadings must state
transactions, occurrences or events which took place since
the time the pleading sought to be supplemented was
filed.35
_______________
34 Id., at p. 539.
35 De Rama v. Court of Appeals, 405 Phil. 531, 547; 353 SCRA 94, 104
(2001).
302

Even on the merits of the case, for reasons that will be

discussed below, respondentÊs counterclaim is doomed to
fail.
PetitionerÊs Complaint
In its complaint for sum of money, petitioner prayed that
respondent be ordered to pay his obligation amounting to

P1,936,800.00 plus interest and penalty charges, and
attorneyÊs fees. This obligation was evidenced by two
promissory notes executed by respondent. Respondent,
however, denied liability on the ground that his obligation
was subject to a condition that did not occur. He explained
that the promissory notes were dependent upon the
happening of a remote event that the parties tried to
anticipate at the time they transacted with each other, and
the event did not happen.36 He further insisted that he did
not receive the proceeds of the loan.
To ascertain whether or not respondent is bound by the
promissory notes, it must be established that all the
elements of a contract of loan are present. Like any other
contract, a contract of loan is subject to the rules governing
the requisites and validity of contracts in general. It is
elementary in this jurisdiction that what determines the
validity of a contract, in general, is the presence of the
following elements: (1) consent of the contracting parties;
(2) object certain which is the subject matter of the
contract; and (3) cause of the obligation which is
established.37
In this case, respondent denied liability on the ground
that the promissory notes lacked consideration as he did
not receive the proceeds of the loan.
We cannot sustain his contention.
_______________
36 Rollo (G.R. 181482), p. 176.

37 Saguid v. Security Finance, Inc., G.R. No. 159467, December 9,
2005, 477 SCRA 256, 268; Santos v. Heirs of Jose P. Mariano & Erlinda
Mariano-Villanueva, 398 Phil. 174; 344 SCRA 284 (2000).
303
VOL. 623, JULY 5, 2010 303

Under Article 1354 of the Civil Code, it is presumed that

consideration exists and is lawful unless the debtor proves
the contrary.38 Moreover, under Section 3, Rule 131 of the
Rules of Court, the following are disputable presumptions:

(1) private transactions have been fair and regular; (2) the
ordinary course of business has been followed; and (3) there
was sufficient consideration for a contract.39 A presumption
may operate against an adversary who has not introduced
proof to rebut it. The effect of a legal presumption upon a
burden of proof is to create the necessity of presenting
evidence to meet the legal presumption or the prima facie
case created thereby, and which, if no proof to the contrary
is presented and offered, will prevail. The burden of proof
remains where it is, but by the presumption, the one who
has that burden is relieved for the time being from
introducing evidence in support of the averment, because
the presumption stands in the place of evidence unless
rebutted.40
In the present case, as proof of his claim of lack of
consideration, respondent denied under oath that he owed
petitioner a single centavo. He added that he did not apply
for a loan and that when he signed the promissory notes,
they were all blank forms and all the blank spaces were to
be filled up only if the sale transaction over the subject
properties would not push through because of a possible
adverse decision in the civil cases involving them (the
properties). He thus posits that since the sale pushed
through, the promissory notes did not become effective.
Contrary to the conclusions of the RTC and the CA, we
find such proof insufficient to overcome the presumption of
consideration. The presumption that a contract has
sufficient consideration cannot be overthrown by the bare,
uncorroborated
_______________
38 Saguid v. Security Finance, Inc., supra, at 270.

39 Surtida v. Rural Bank of Malinao (Albay), Inc., G.R. No. 170563,
December 20, 2006, 511 SCRA 507, 519.
40 Id., at pp. 519-520.
304

and self-serving assertion of respondent that it has no

consideration.41 The alleged lack of consideration must be
shown by preponderance of evidence.42
As it now appears, the promissory notes clearly stated
that respondent promised to pay petitioner P1,520,000.00
and P416,800.00, plus interests and penalty charges, a year
after their execution. Nowhere in the notes was it stated
that they were subject to a condition. As correctly observed
by petitioner, respondent is not only a lawyer but a law
professor as well. He is, therefore, legally presumed not
only to exercise vigilance over his concerns but, more
importantly, to know the legal and binding effects of
promissory notes and the intricacies involving the
execution of negotiable instruments including the need to
execute an agreement to document extraneous collateral
conditions and/or agreements, if truly there were such.43
This militates against respondentÊs claim that there was
indeed such an agreement. Thus, the promissory notes
should be accepted as they appear on their face.
RespondentÊs liability is not negated by the fact that he
has uncollected commissions from the sale of the Molino
properties. As the records of the case show, at the time of
the execution of the promissory notes, the Molino
properties were subject of various court actions commenced
by different parties. Thus, the sale of the properties and,
consequently, the payment of respondentÊs commissions
were put on hold. The non-payment of his commissions
could very well be the reason why he obtained a loan from
petitioner.
In Sierra v. Court of Appeals,44 we held that:
„A promissory note is a solemn acknowledgment of a debt and a

formal commitment to repay it on the date and under the condi-
_______________
41 Id., at p. 520; Fernandez v. Fernandez, 416 Phil. 322; 363 SCRA 811
(2001).
42 Surtida v. Rural Bank of Malinao (Albay), Inc., supra, at 520.
43 Rollo (G.R. No. 181482), p. 59.
44 G.R. No. 90270, July 24, 1992, 211 SCRA 785, 795.
305
VOL. 623, JULY 5, 2010 305

tions agreed upon by the borrower and the lender. A person who
signs such an instrument is bound to honor it as a legitimate
obligation duly assumed by him through the signature he affixes
thereto as a token of his good faith. If he reneges on his promise
without cause, he forfeits the sympathy and assistance of this Court
and deserves instead its sharp repudiation.‰
Aside from the payment of the principal obligation of

P1,936,800.00, the parties agreed that respondent pay
interest at the rate of 25% from February 17, 1997 until
fully paid. Such rate, however, is excessive and thus, void.
Since the stipulation on the interest rate is void, it is as if
there was no express contract thereon. To be sure, courts
may reduce the interest rate as reason and equity
demand.45 In this case, 12% interest is reasonable.
The promissory notes likewise required the payment of a
penalty charge of 3% per month or 36% per annum. We find
such rates unconscionable. This Court has recognized a
penalty clause as an accessory obligation which the parties
attach to a principal obligation for the purpose of ensuring
the performance thereof by imposing on the debtor a
special prestation (generally consisting of the payment of a
sum of money) in case the obligation is not fulfilled or is
irregularly or inadequately fulfilled.46 However, a penalty
charge of 3% per month is unconscionable;47 hence, we
reduce it to 1% per month or 12% per annum, pursuant to
Article 1229 of the Civil Code which states:
„Art. 1229. The judge shall equitably reduce the penalty when

the principal obligation has been partly or irregularly complied with
by the debtor. Even if there has been no performance, the pen-
_______________
45 Ileana Dr. Macalinao v. Bank of the Philippine Islands, G.R. No. 175490,
September 17, 2009; 600 SCRA 67.
46 Development Bank of the Philippines v. Family Foods Manufacturing Co.,
Ltd., G.R. No. 180458, July 30, 2009, 594 SCRA 461.
47 See Ileana Dr. Macalinao v. Bank of the Philippine Islands, supra note 45.
306

alty may also be reduced by the courts if it is iniquitous or

unconscionable.‰48
Lastly, respondent promised to pay 25% of his

outstanding obligations as attorneyÊs fees in case of non-
payment thereof. AttorneyÊs fees here are in the nature of
liquidated damages. As long as said stipulation does not
contravene law, morals, or public order, it is strictly binding
upon respondent. Nonetheless, courts are empowered to
reduce such rate if the same is iniquitous or unconscionable
pursuant to the above-quoted provision.49 This sentiment is
echoed in Article 2227 of the Civil Code, to wit:
„Art. 2227. Liquidated damages, whether intended as an

indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable.‰
Hence, we reduce the stipulated attorneyÊs fees from 25% to

10%.50
RespondentÊs Counterclaim and Supplemental

Counterclaim
The RTC, affirmed by the CA, granted respondentÊs

counterclaims as it applied the doctrine of piercing the veil
of corporate fiction. It is undisputed that the parties to the
contract of sale of the subject properties are Pentacapital
Realty as the buyer, CRDI as the seller, and respondent as
the agent of CRDI. Respondent insisted, and the RTC and
the CA agreed, that petitioner, as the parent company of
Pentacapital Realty, was aware of the sale transaction, and
that it was the former who paid the consideration of the
sale. Hence, they concluded that the two corporations
should be treated as one entity.
_______________
48 Emphasis supplied.
49 Co v. Admiral United Savings Bank, G.R. No. 154740, April 16,

2008, 551 SCRA 472.
50 Id.; Sim v. M.B. Finance Corporation, G.R. No. 164300, November
29, 2006, 508 SCRA 556.
307
VOL. 623, JULY 5, 2010 307

Petitioner assails the CA Decision sustaining the grant

of respondentÊs counterclaim and supplemental
counterclaim on the following grounds: first, respondentÊs
claims are barred by res judicata, the same having been
adjudicated with finality by the RTC-Cebu in Civil Case
No. CEB-25032; second, piercing the veil of corporate
fiction is without basis; third, the case is dismissible for
failure to implead Pentacapital Realty as indispensable
party; and last, respondentÊs supplemental counterclaim is
actually a third party complaint against Pentacapital
Realty, the filing thereof requires the payment of the
necessary docket fees.
PetitionerÊs contentions are meritorious.
Res judicata means „a matter adjudged; a thing
judicially acted upon or decided; a thing or matter settled
by judgment.‰ It lays the rule that an existing final
judgment or decree rendered on the merits, without fraud
or collusion, by a court of competent jurisdiction, upon any
matter within its jurisdiction, is conclusive of the rights of
the parties or their privies, in all other actions or suits in
the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first
suit.51
The requisites of res judicata are:
(1) The former judgment or order must be final;

(2) It must be a judgment on the merits;
(3) It must have been rendered by a court having jurisdiction over
the subject matter and the parties; and
(4) There must be between the first and second actions, identity of
parties, subject matter, and cause of action.52
_______________
51 Heirs of Panfilo F. Abalos v. Bucal, G.R. No. 156224, February 19,

2008, 546 SCRA 252, 271-272.
52 The Estate of Don Filemon Y. Sotto v. Palicte, G.R. No. 158642,
September 22, 2008, 566 SCRA 142, 150; Mallion v. Alcantara, G.R. No.
141528, October 31, 2006, 506 SCRA 336, 343-344.
308

These requisites are present in the instant case. It is

undisputed that respondent instituted an action for
Preliminary Mandatory Injunction against Pentacapital
Realty, before the RTC of Cebu City, docketed as Civil Case
No. CEB-25032. On motion of Pentacapital Realty, in an
Order dated August 15, 2001, the court dismissed the
complaint on two grounds: 1) non-payment of the correct
filing fee considering that the complaint was actually a
collection of sum of money although denominated as
Preliminary Mandatory Injunction; and 2) lack of cause of
action. The court treated the complaint as a collection suit
because respondent was seeking the payment of his unpaid
commission or share in the proceeds of the sale of the
Molino Properties. Additionally, the RTC found that
respondent had no cause of action against Pentacapital
Realty, there being no privity of contract between them.
Lastly, the court held that it was CRDI which agreed that
20% of the total consideration of the sale be paid and
delivered to respondent.53 Instead of assailing the said
Order, respondent filed his supplemental compulsory
counterclaim, demanding again the payment of his
commission, this time, against petitioner in the instant
case. The Order, therefore, became final and executory.
RespondentÊs supplemental counterclaim against
petitioner is anchored on the doctrine of piercing the veil of
corporate fiction. Obviously, after the dismissal of his
complaint before the RTC-Cebu, he now proceeds against
petitioner, through a counterclaim, on the basis of the same
cause of action. Thus, if we follow respondentÊs contention
that petitioner and Pentacapital Realty are one and the

same entity, the latter being a subsidiary of the former,
respondent is barred from instituting the present case
based on the principle of bar by prior judgment. The RTC-
Cebu already made a definitive conclusion that
Pentacapital Realty is not a privy to the contract between
respondent and CRDI. It also categorically stated
_______________
53 Rollo (G.R. No. 181482), pp. 168-170.
309
VOL. 623, JULY 5, 2010 309

that it was CRDI which agreed to pay respondentÊs

commission equivalent to 20% of the proceeds of the sale.
With these findings, and considering that petitionerÊs
alleged liability stems from its supposed relation with
Pentacapital Realty, logic dictates that the findings of the
RTC-Cebu, which had become final and executory, should
bind petitioner.
It is well-settled that when material facts or questions in
issue in a former action were conclusively settled by a
judgment rendered therein, such facts or questions
constitute res judicata and may not again be litigated in a
subsequent action between the same parties or their
privies regardless of the form of the latter.54 Absolute
identity of parties is not required, and where a shared
identity of interest is shown by the identity of the relief
sought by one person in a prior case and the second person
in a subsequent case, such was deemed sufficient.55 There
is identity of parties not only when the parties in the cases
are the same, but also between those in privity with them.
No other procedural law principle is indeed more settled
than that once a judgment becomes final, it is no longer
subject to change, revision, amendment, or reversal, except
only for correction of clerical errors, or the making of nunc
pro tunc entries which cause no prejudice to any party, or
where the judgment itself is void. The underlying reason
for the rule is two-fold: (1) to avoid delay in the

administration of justice and thus make orderly the
discharge of judicial business; and (2) to put judicial
controversies to an end, at the risk of occasional errors,
inasmuch as controversies cannot be allowed to drag on
indefinitely and the rights and obligations of every
_______________
54 Navarro v. Metropolitan Bank & Trust Company, G.R. Nos. 165697

& 166481, August 4, 2009, 595 SCRA 149.
55 The Estate of Don Filemon Y. Sotto v. Palicte, supra note 52, at 152.
310

litigant must not hang in suspense for an indefinite period

of time.56
In view of the foregoing disquisitions, we find no
necessity to discuss the other issues raised by petitioner.
Forum Shopping
For his part, respondent adopts the conclusions made by
the RTC and the CA in granting his counterclaims. He adds
that the petition should be dismissed on the ground of
forum-shopping. He argues that petitioner is guilty of
forum-shopping by filing the petition for review (G.R. No.
181482), assailing the CA Decision dated October 4, 2007,
despite the pendency of G.R. No. 171736 assailing the CA
Decision dated December 20, 2005.
We do not agree with respondent.
Forum-shopping is the act of a litigant who repetitively
availed of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and
circumstances, and all raising substantially the same
issues, either pending in or already resolved adversely by
some other court, to increase his chances of obtaining a
favorable decision if not in one court, then in another.57
What is important in determining whether forum-
shopping exists is the vexation caused the courts and
parties-litigants by a party who asks different courts and/or

administrative agencies to rule on the same or related
causes and/or grant the same or substantially the same
reliefs, in the process
_______________
56 Navarro v. Metropolitan Bank & Trust Company, supra note 54.

57 Briones v. Henson-Cruz, G.R. No. 159130, August 22, 2008, 563
SCRA 69, 84.
311
VOL. 623, JULY 5, 2010 311

creating the possibility of conflicting decisions being

rendered by the different fora upon the same issues.58
Forum-shopping can be committed in three ways: (1) by
filing multiple cases based on the same cause of action and
with the same prayer, the previous case not having been
resolved yet (where the ground for dismissal is litis
pendentia); (2) by filing multiple cases based on the same
cause of action and with the same prayer, the previous case
having been finally resolved (where the ground for
dismissal is res judicata); and (3) by filing multiple cases
based on the same cause of action but with different
prayers (splitting of causes of action, where the ground for
dismissal is also either litis pendentia or res judicata).59
More particularly, the elements of forum-shopping are:
(a) identity of parties or at least such parties that represent
the same interests in both actions; (b) identity of rights
asserted and reliefs prayed for, the relief being founded on
the same facts; (c) identity of the two preceding particulars,
such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res
judicata in the action under consideration.60
These elements are not present in this case. In G.R. No.
171736, petitioner assails the propriety of the admission of
respondentÊs supplemental compulsory counterclaim; while
in G.R. No. 181482, petitioner assails the grant of
respondentÊs supplemental compulsory counterclaim. In
other words, the first case originated from an interlocutory

order of the RTC, while the second case is an appeal from
the decision of the court on the merits of the case. There is,
therefore, no forum-
_______________
58 Collantes v. Court of Appeals, G.R. No. 169604, March 6, 2007, 517

SCRA 561, 568.
59 Id., at p. 569; Ao-As v. Court of Appeals, G.R. No. 128464, June 20,
2006, 491 SCRA 339.
60 Id.; Marcopper Mining Corporation v. Solidbank Corporation, 476
Phil. 415; 432 SCRA 360 (2004).
312

shopping for the simple reason that the petition and the
appeal involve two different and distinct issues.
WHEREFORE, premises considered, the petitions are
hereby GRANTED. The Decisions and Resolutions of the
Court of Appeals dated December 20, 2005 and March 1,
2006, in CA-G.R. SP No. 74851, and October 4, 2007 and
January 21, 2008, in CA-G.R. CV No. 86939, are
REVERSED and SET ASIDE.
Respondent Makilito B. Mahinay is ordered to pay
petitioner Pentacapital Investment Corporation
P1,936,800.00 plus 12% interest per annum, and 12% per
annum penalty charge, starting February 17, 1997. He is
likewise ordered to pay 10% of his outstanding obligation
as attorneyÊs fees. No pronouncement as to costs.
SO ORDERED.
Carpio (Chairperson), Peralta, Abad and Mendoza, JJ.,

concur.
Petitions granted, judgments and resolutions reversed

and set aside.
Notes.·The purpose of a supplemental pleading is to
bring into the records new facts which will enlarge or

change the kind of relief to which the plaintiff is entitled.
(Planters Development Bank vs. LZK Holdings and
Development Corporation, 456 SCRA 366 [2005])
A promissory note is a solemn acknowledgment of a debt
and a formal commitment to repay it on the date and under
the conditions agreed upon by the borrower and the lender.
(Dela Peña vs. Court of Appeals, 579 SCRA 396 [2009])
··o0o··
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SUPREME COURT REPORTS ANNOTATED VOLUME 623 13/12/2017, 9*46 PM

G.R. No. 171736. July 5, 2010.*

PENTACAPITAL INVESTMENT CORPORATION,

G.R. No. 181482. July 5, 2010.*

PENTACAPITAL INVESTMENT CORPORATION,

Actions; Pleadings and Practice; Supplemental Pleadings; As a

already existed and was known to respondent at the time of the

VOL. 623, JULY 5, 2010 285

Pentacapital Investment Corporation vs. Mahinay

via a supplemental pleading. The supplemental pleading must be

relieved for the time being from introducing evidence in support of

286 SUPREME COURT REPORTS ANNOTATED

Pentacapital Investment Corporation vs. Mahinay

Same; Same; Same; The presumption that a contract has

of respondent that it has no consideration. The alleged lack of

VOL. 623, JULY 5, 2010 287

Pentacapital Investment Corporation vs. Mahinay

Same; Loans; Promissory Notes; A promissory note is a solemn

and deserves instead its sharp repudiation.

288 SUPREME COURT REPORTS ANNOTATED

Pentacapital Investment Corporation vs. Mahinay

Same; Same; AttorneyÊs Fees; Courts are empowered to reduce

pursuant to the above-quoted provision. This sentiment is echoed in

VOL. 623, JULY 5, 2010 289

Pentacapital Investment Corporation vs. Mahinay

ties is not required, and where a shared identity of interest is

290 SUPREME COURT REPORTS ANNOTATED

Pentacapital Investment Corporation vs. Mahinay

PETITIONS for review on certiorari of the decision and

VOL. 623, JULY 5, 2010 291

Solis, Medina, Limpengco & Fajardo Law Offices for

Petitioner filed a complaint for a sum of money against

1 Penned by Associate Justice Mario L. Guariña III, with Associate

4 Id., at pp. 99-100.

292 SUPREME COURT REPORTS ANNOTATED

promissory notes on which its complaint was based were

VOL. 623, JULY 5, 2010 293

ent parties which thus prevented respondent from

13 Id., at pp. 208-212.

294 SUPREME COURT REPORTS ANNOTATED

and the same entity belonging to the Pentacapital Group of

ASSERTING THE CLAIM CONTAINED IN HIS

21 Id., at pp. 224-227.

VOL. 623, JULY 5, 2010 295

INASMUCH AS (1) RESPONDENT MAHINAYÊS PLEADINGS

296 SUPREME COURT REPORTS ANNOTATED

EVADE AN OBLIGATION AND FACILITATE PROCEDURAL

There being no writ of injunction or Temporary

„WHEREFORE, PREMISES CONSIDERED, plaintiff Ês complaint is

25 Id., at pp. 459-460.

VOL. 623, JULY 5, 2010 297

3. Php 50,000.00 as attorneyÊs fees based on quantum meruit;

On appeal, the CA, in CA-G.R. CV No. 86939, affirmed

P1,715,156.90.29 The CA likewise affirmed the award of

27 Id., at pp. 322-323.

298 SUPREME COURT REPORTS ANNOTATED

Petitioner PentaCapital Investment cannot be held liable on the

VOL. 623, JULY 5, 2010 299

proceedings a quo as a supposed supplemental compulsory