Title
Air Ads, Inc. vs. Tagum Agricultural Development Corp.
Case
G.R. No. 160736
Decision Date
Mar 23, 2011
A dispute over third-party complaints in a damages case, involving forum shopping claims and the validity of substitute pleadings, ultimately upheld by the Supreme Court.
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Case Digest (G.R. No. 160736)

Facts:

Background of the Case

This case originated from Civil Case No. 27802-2000, filed in the Regional Trial Court (RTC) of Davao City, Branch 15, entitled Elva O. Pormento v. Tagum Agricultural Development Corporation (TADECO) and Edwin Yap. The case involved a claim for damages due to the death of the plaintiff’s husband and attorney’s fees.

Third-Party Complaint

On April 6, 2000, TADECO, through its counsel ACCRA Law Office, filed an answer with compulsory counterclaims and a motion for leave to file a third-party complaint. The third-party complaint impleaded Air Ads, Inc. and Pioneer Insurance and Surety Corporation (Pioneer) as third-party defendants. The RTC admitted the third-party complaint on April 14, 2000.

Dismissal of Third-Party Complaint Against Pioneer

On June 16, 2000, ACCRA Law Office filed a notice of dismissal without prejudice regarding the third-party complaint against Pioneer, as Pioneer was also a client of ACCRA’s Makati Office. However, on June 26, 2000, TADECO, through new counsel Dominguez Paderna & Tan Law Offices (Dominguez Law Office), filed a motion to withdraw the notice of dismissal, claiming it was filed without TADECO’s consent. The RTC granted the motion on June 29, 2000, effectively reinstating the third-party complaint against Pioneer.

Substitute Third-Party Complaint

On July 25, 2000, TADECO, through Dominguez Law Office, filed a motion to admit a substitute third-party complaint, which only named Pioneer as the third-party defendant. The RTC granted the motion on August 28, 2000.

Air Ads’ Motion to Dismiss

Air Ads filed a motion to dismiss, arguing that it had been dropped as a third-party defendant in the substitute third-party complaint. The RTC denied the motion on July 25, 2002, ruling that the original third-party complaint against Air Ads remained valid.

Appeal to the Court of Appeals

Air Ads filed a petition for certiorari and prohibition with the Court of Appeals (CA), which was dismissed on November 13, 2002, due to a defective verification and certification against forum shopping. Air Ads then filed a second petition, which was also dismissed by the CA on February 24, 2003. The CA denied Air Ads’ motion for reconsideration on November 13, 2003.

Issue:

  • (Unlock)

Ruling:

  • (Unlock)

Ratio:

  1. Forum Shopping: Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, the dismissal of a petition due to a defective certification against forum shopping is without prejudice unless otherwise specified. Since the CA did not specify that the dismissal was with prejudice, Air Ads was not barred from refiling the petition. The Court cited Heirs of Juan Valdez v. Court of Appeals to support this ruling.

  2. Substitute Third-Party Complaint: The substitute third-party complaint only replaced the complaint against Pioneer and did not affect the original complaint against Air Ads. The Court emphasized that the nature of a pleading is determined by its allegations, not its caption. Since the substitute complaint did not strike out any allegations against Air Ads, the original complaint remained valid. The Court also noted that the substitution was done to avoid conflict of interest with ACCRA Law Office, which represented both TADECO and Pioneer.

Conclusion:

The Supreme Court denied Air Ads’ petition for review on certiorari and affirmed the CA’s resolutions dismissing the petition. The Court held that Air Ads’ refiling of the petition did not constitute forum shopping and that the substitute third-party complaint did not supersede the original complaint against Air Ads. Costs were imposed against Air Ads.


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