G.R. No. 121484 ; January 31, 2005
MEA BUILDERS, INC., VICENTE LLAVE, ERNESTO YU and ANGEL YUANLIAN, Petitioners, vs. COURT OF APPEALS and METROPOLITAN BANK AND TRUST COMPANY, Respondents.

FACTS

Petitioners MEA Builders, Inc. (MEA) entered into a construction contract with Capital Resources Corporation (CRC), with payment to be covered partly by standby letters of credit from respondent Metropolitan Bank and Trust Company (Metrobank) under a tripartite agreement. To increase its capital, MEA obtained a ₱3,000,000 advance from Metrobank, secured by a promissory note and a suretyship agreement executed by individual petitioners Vicente Llave, Ernesto Yu, and Angel Yuanlian. When MEA later completed housing units, a portion of the proceeds due from Metrobank was applied to partially liquidate this advance, leaving a balance of ₱1,500,000 covered by a new promissory note.
MEA subsequently suspended operations and later demanded payment for all accomplished work. Meanwhile, MEA defaulted on the ₱1.5 million promissory note. Metrobank filed a collection suit. Petitioners, in their answer, admitted the note and suretyship but claimed the true agreement was for the amount to be payable only from the proceeds of the letters of credit, not as a straight loan. The trial court ruled for Metrobank but awarded petitioners a significant sum on their counterclaim. The Court of Appeals affirmed the bank’s right to collect but drastically reduced the counterclaim award.

ISSUE

Whether the Court of Appeals erred in reducing the amount awarded to petitioners on their counterclaim.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals’ decision. The legal logic centered on procedural grounds, specifically a fatal defect in the petition’s verification. The verification and certification against forum-shopping attached to the petition was executed and signed only by petitioners’ counsel, not by the petitioners themselves as required by Revised Circular No. 28-91 (now embodied in the Rules of Court). This rule mandates that the party, not counsel, must sign the certification, as they have personal knowledge of the facts pleaded and whether any similar action has been filed. The Court strictly applied this procedural requirement, holding that the lapse was sufficient cause for the outright dismissal of the petition. Consequently, the Court did not reach the substantive merits of the case regarding the reduction of the counterclaim. The dismissal on this technicality rendered a review of the appellate court’s factual and legal assessments unnecessary.