CivPro Case Set 3

Civil Procedure Case Set 3 New Era University College of Law PERRAL
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 74903 March 21, 1989 lot with the consent of plaintiff who collected and received the rentals due up to the present; that there is no real necessity for the plaintiff to repossess the lots in question and for her to eject them, as they are in dire need of a house to pursue a means of livelihood in Manila; and as they refused to sign the compromise agreement, adverted to above, they called themselves as the 'non-compromising defendants.' (p. 151, Rollo) Meanwhile, Evangelina Quiambao conveyed all her rights and interest on subject parcel of land to herein petitioner Efren Nang To Dy, who thereafter substituted her as party-plaintiff. Insofar as the so-called non-compromising defendants were concerned, petitioner filed on May 28, 1985 a Motion for Summary Judgment under Rule 34 of the Revised Rules of Court. Acting on the said motion, the Municipal Trial Court rendered its decision on August 15, 1985, approving the compromise agreement executed by and between the plaintiff and the sixteen (16) defendants and ordering the ejectment from the subject land of the other twenty nine (29) defendants plus one Vicente Leonardo. The dispositive portion of the decision reads, viz: WHEREFORE, judgment is hereby rendered ordering the defendants, namely, Emilia Vizamanos, Nenita Sarit ,Lolita de Vera, Rogelio Rico, Eduvigio Castro, Daniel Abulencia, Florencio Alberto, Benigno Angeles, Lolita Angeles, Juanita Carpio, Orlando Cesar, Angelina Cheng, Lydia Cruz, Melchor Diocera, Perla Dona, Jose Gamet, Lilia Gamet, Florentina Hebron, Jose Mata, Rogelio Ponce, Catalino Gamet, Esteban Rabago, Benjamin Amansec, Domingo Tubeo, Sofia Redoloza, Federico Ponce, Agustin Gamet, Petrocinio Gamet and Gregorio Dona, plus one Vicente Leonardo (who does not appear as a party-defendant in the complaint, but who has been represented in these proceedings by Atty. Evaristo Urbina as counsel for the last named 10 defendants), and all persons claiming right under them, to vacate plaintiffs land located at No. 24 General Lim Street, San Francisco del Monte, Quezon City, and to demolish and remove their houses and whatever constructions they have made thereon; to pay the plaintiff their respective accrued reasonable monthly rents on the premises from June 7, 1979, computed at P100.00 each, a month, until the defendants shall have vacated the premises being respectively occupied by them with interest thereof at the legal rate of 12% per annum from today until the amount shall have been fully paid and an additional sum of P5,000.00, as and for attorney's fees, plus the costs of this suit. SO ORDERED. (pp. 3-4, Memorandum for the Respondents; pp. 175-176, Rollo) Invoking Sec. 8, Rule 70 of the Rules of Court, petitioner, as the then plaintiff, filed a motion for execution. Instead of appealing, the non-compromising defendants thru Atty. Urbina filed a Motion for Reconsideration, which petitioner moved to strike out as being a "prohibited pleading" under the Rule on Summary Procedure. In an Order dated September 20, 1985, the Municipal Trial Court ordered (a) the motion for reconsideration striken out from the record and (b) the issuance of a writ of execution. Atty. Urbina filed a Notice of Appeal but upon petitioner's motion, on the ground that since the motion for reconsideration did not stop the running of the reglementary period for appeal and that therefore the decision has already become final and executory, the Municipal Trial Court ordered the dismissal of the notice of appeal in its Order dated October 16, 1985. Against the aforesaid Orders dated September 20, 1985, and October 16, 1985, Atty. Urbina filed a petition for certiorari and mandamus with the Regional Trial Court of Quezon City. The case was docketed as Civil Case No. Q-46541, assigned to Branch LXXXIX thereof, presided over by respondent Judge Rodolfo Ortiz. On June 6, 1986, respondent Judge Ortiz rendered his now assailed decision, the dispositive portion of which reads ACCORDINGLY, judgment is hereby rendered nullifying the order of respondent judge, in Civil Case No. 35511 dated September 20, 1985 which ordered the issuance of a writ of execution and his order dated October 16, 1985 which dismissed petitioners' notice of appeal, ordering thereby respondent judge to give due course to the appeal of the petitioners filed on September 25, 1985, and to forward consequent thereto the entire original records of Civil Case No. 35511 to the Regional Trial Court of Quezon City for further proceedings, with costs against the private respondent. The preliminary injunction issued on December 10, 1985, is made permanent. SO ORDERED. (p. 7, Annex A of Petition; p. 26, Rollo) The rationale of the said decision is that, since Judge Laguio Jr. of the Municipal Trial Court rendered the Summary Judgment on the basis of Rule 34 of the Revised Rules of Court, it stand to reason that defendants, (herein private respondents) adversely affected by said summary judgment must seek, as they did, reliefs and remedies under the same Revised Rules of Court. Petitioners now question the above ruling of respondent Judge Ortiz. While they never disputed the fact the Summary Judgment of the Metropolitan Trial Court was indeed rendered on the basis of Rule 34 of the Revised Rules of Court, they nevertheless maintain that the Rules on Summary Procedure must be applied on the private respondent's Motion for Reconsideration if only to treat the same as a prohibited pleading under Sec. 15(c) of the said Rule 7 on Summary Procedure and consequently the Summary Judgment sought to be appealed became final and executory.
HON. PERFECTO A.S. LAGUIO, JR., Presiding Judge of Metropolitan Trial Court of Quezon City, Branch XXXIX (formerly Br. IX), CITY SHERIFF OF QUEZON CITY Thru GUILLERMO M. LANSANG and/or his substitute, and EFREN NANG TO DY, petitioners, vs. CATALINO GAMET, SOFIA REDOLOZA, DOMINGO TUBEO, AGUSTIN GAMET, BENJAMIN AMANSEC & VICENTE LEONARDO, and HON. RODOLFO A. ORTIZ, as Presiding Judge of Regional Trial Court of Quezon City, Branch LXXXIX, respondents. Noblejas, Sorreta & Associates for petitioners. Urbina & Associates Law Office for private respondents.
PARAS, J.: The instant petition for review stemmed from an action for unlawful detainer, commenced on June 7, 1979 by Evangelina Quiambao before the Municipal Trial Court of Quezon City, Branch 39, against some forty-five (45) defendants who were allegedly illegally occupying her land located at No. 24 General Lim Street, San Francisco del Monte, Quezon City. The case was docketed as Civil Case No. 35511. Of the forty-five (45) defendants a) 5 were declared in default, and evidence against them was presented ex parte (TSN, 10- 17-79; formal offer of evidence, 4-26-85); b) 15 entered into a compromise agreement with original plaintiff Evangelina Quiambao whereby the latter agreed to sell the subject land to them in the terms and conditions, set forth in the DECISION of the MTC Court (Annex B of Petitioner); . c) 15, while filing an answer to the complaint, did not appear during the trial despite notice, for which reason plaintiffs evidence was deemed presented ex parte as against them; '(1) but admitting plaintiffs ownership over the subject land;
(2) alleging that they have been in occupation and possession of a small portion of the lots in question for more than 10 years; that they constructed their houses within the subject
It is a matter of record that when this case was filed in 1979, the Rules on Summary Procedure was not yet a law. This took effect only on August 1, 1983. Thus, Judge Laguio, Jr. of the Metropolitan Trial Court tried the case on the merits with the presentation of one witness in the person of the original plaintiff, Evangelina Quiambao. Then, on a motion for Summary Judgment filed by herein petitioner who substituted Evangelina Quiambao as party plaintiff, Judge Laguio Jr. rendered a Summary Judgment on August 15, 1985. All these proceedings were done pursuant to the provisions of the Revised Rules of Court. It is to be noted that under these rules a motion for reconsideration is allowed and this will toll the running of the period for appeal. So, when private respondents filed their motion for reconsideration on August 26, 1985 or eleven (11) days from receipt of a copy of the decision, the period for appeal was interrupted. Their appeal, therefore, filed on September 25, 1985 (the very same day they received the notice of the denial of their motion for reconsideration) was filed well within the period to appeal. But, Judge Laguio Jr. did not apply the Revised Rules of Court which allows a motion for reconsideration. Instead, he applied the Rule on Summary Procedure which prohibits Motion for New Trial, or for reconsideration or for re-opening of trial. This question therefore, arises: Is the rule on Summary Procedure applicable to cases filed prior to the date of its effectivity on August 1, 1983 and still pending on that date? As a general rule, new Rules of Court on procedure apply to pending cases (People vs. Sumilang, 77 Phil. 764). Being procedural in nature, those provisions may be applied retroactively. (Executive Order No. 864, dated January 17, 1983 cited in Alday vs. Camilon 120 SCRA 522) The specific dimensions of the matter, however, may be grasped with the assistance of the Rules of Court, Rule 144 thereof, the last rule entitled "Effectiveness" reading as follows: These Rules shall take effect on January 1, 1964. They shall govern all cases brought after they take effect and also all further proceedings in cases then pending, except to the extent that in the opinion of the court their application would not be feasible or would work injustice, in which event the former procedure shall apply. The foregoing text except for the date mentioned therein has been reproduced in toto from the last rule of the 1940 Rules of Court, more specifically, Rule 133 thereof. Going by the above-quoted provision which is in pari-materia new court rules apply to pending cases only with reference to proceedings therein which take place after the date of their effectivity. (Pacho vs. Uy Tioco, 9 Phil. 123) They do not apply "to the extent that in the opinion of the court their application would not be feasible or would work injustice in which event the former procedure shall apply." In the case at bar, the application of the rule on Summary Procedure will work injustice to the private respondents, because it will mean the dismissal of their appeal. The interest of justice will be better served if private respondents will be allowed to pursue their appeal. After all, the procedure they have availed of was allowed under the Revised Rules of Court. Also, the application of the said rule on Summary Procedure is not feasible. Before summary procedure could be applied to parties-litigants, prior notice to the latter to that effect should be made, as mandated by the provisions of Section 3 of the Rules on Summary Procedure, to wit: Sec. 3. Duty of the Court upon filing of complaint. Upon the filing of the complaint, the court, from a consideration of the allegations thereof: a) May dismiss the case outright due to lack of jurisdiction, improper venue, failure to state a cause of action, or for any other valid ground for the dismissal of a civil action; or b) if a dismissal is not ordered, shall make a determination whether the case falls under summary procedure. In the affirmative case, the summons must STATE that the summary procedure under this Rule shall apply. (capitalization supplied) Clearly then, the rule requires prior notice to the parties of its application which notice must be contained in the summons duly served to them. In this case no such notice was made. In view of all the foregoing, the petition is DISMISSED. SO ORDERED.
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 138822 January 23, 2001 the trial court's jurisdiction over petitioner's counterclaim since this issue was raised by respondent with the trial court itself - the body where the action is pending - even before the presentation of any evidence by the parties and definitely, way before any judgment could be rendered by the trial court. Meanwhile, respondent questions the jurisdiction of the Court of Appeals over the appeal filed by petitioner from the 18 September 1990 and 28 February 1991 orders of the trial court. It is significant to note that this objection to the appellate court's jurisdiction is raised for the first time before this Court; respondent never having raised this issue before the appellate court. Although the lack of jurisdiction of a court may be raised at any stage of the action, a party may be estopped from raising such questions if he has actively taken part in the very proceedings which he questions, belatedly objecting to the court's jurisdiction in the event that the judgment or order subsequently rendered is adverse to him.16 In this case, respondent actively took part in the proceedings before the Court of Appeals by filing its appellee's brief with the same.17 Its participation, when taken together with its failure to object to the appellate court's jurisdiction during the entire duration of the proceedings before such court, demonstrates a willingness to abide by the resolution of the case by such tribunal and accordingly, respondent is now most decidedly estopped from objecting to the Court of Appeals' assumption of jurisdiction over petitioner's appeal.18 The basic issue for resolution in this case is whether or not the counterclaim of petitioner is compulsory or permissive in nature. A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.19 In Valencia v. Court of Appeals,20 this Court capsulized the criteria or tests that may be used in determining whether a counterclaim is compulsory or permissive, summarized as follows: 1. Are the issues of fact and law raised by the claim and counterclaim largely the same? 2. Would res judicata bar a subsequent suit on defendant's claim absent the compulsory counterclaim rule? 3. Will substantially the same evidence support or refute plaintiff's claim as well s defendant's counterclaim? 4. Is there any logical relation between the claim and the counterclaim? Another test, applied in the more recent case of Quintanilla v. Court of Appeals,21 is the "compelling test of compulsoriness" which requires "a logical relationship between the claim and counterclaim, that is, where conducting separate trials of the
Contrary to the protestations of appellant, mere reading of the allegations in the answer a quo will readily show that her counterclaim can in no way be compulsory. Take note of the following numbered paragraphs in her answer: "(14) That, indeed, FGU's cause of action which is not supported by any document other than the self-serving 'Statement of Account' dated March 28, 1988 x x x (15) That it should be noted that the cause of action of FGU is not the enforcement of the Special Agent's Contract but the alleged 'cash accountabilities which are not based on written agreement x x x. x x x x
EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATION, respondent. GONZAGA-REYES, J.: On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the Regional Trial Court of Makati1 alleging that petitioner Evangeline K. Alday owed it P114,650.76, representing unliquidated cash advances, unremitted costs of premiums and other charges incurred by petitioner in the course of her work as an insurance agent for respondent.2 Respondent also prayed for exemplary damages, attorney's fees, and costs of suit.3 Petitioner filed her answer and by way of counterclaim, asserted her right for the payment of P104,893.45, representing direct commissions, profit commissions and contingent bonuses earned from 1 July 1986 to 7 December 1986, and for accumulated premium reserves amounting to P500,000.00. In addition, petitioner prayed for attorney's fees, litigation expenses, moral damages and exemplary damages for the allegedly unfounded action filed by respondent.4 On 23 August 1989, respondent filed a "Motion to Strike Out Answer With Compulsory Counterclaim And To Declare Defendant In Default" because petitioner's answer was allegedly filed out of time.5 However, the trial court denied the motion on 25 August 1989 and similarly rejected respondent's motion for reconsideration on 12 March 1990.6 A few weeks later, on 11 April 1990, respondent filed a motion to dismiss petitioner's counterclaim, contending that the trial court never acquired jurisdiction over the same because of the nonpayment of docket fees by petitoner.7 In response, petitioner asked the trial court to declare her counterclaim as exempt from payment of docket fees since it is compulsory and that respondent be declared in default for having failed to answer such counterclaim.8 In its 18 September 1990 Order, the trial court9 granted respondent's motion to dismiss petitioner's counterclaim and consequently, denied petitioner's motion. The court found petitioner's counterclaim to be merely permissive in nature and held that petitioner's failure to pay docket fees prevented the court from acquiring jurisdiction over the same.10 The trial court similar denied petitioner's motion for reconsideration on 28 February 1991.1wphi1.nt On 23 December 1998, the Court of Appeals11 sustained the trial court, finding that petitioner's own admissions, as contained in her answer, show that her counterclaim is merely permissive. The relevant portion of the appellate court's decision12 is quoted herewith -
(19) x x x A careful analysis of FGU's three-page complaint will show that its cause of action is not for specific performance or enforcement of the Special Agent's Contract rather, it is for the payment of the alleged cash accountabilities incurred by defendant during the period form [sic] 1975 to 1986 which claim is executory and has not been ratified. It is the established rule that unenforceable contracts, like this purported money claim of FGU, cannot be sued upon or enforced unless ratified, thus it is as if they have no effect. x x x." To support the heading "Compulsory Counterclaim" in her answer and give the impression that the counterclaim is compulsory appellant alleged that "FGU has unjustifiably failed to remit to defendant despite repeated demands in gross violation of their Special Agent's Contract x x x." The reference to said contract was included purposely to mislead. While on one hand appellant alleged that appellee's cause of action had nothing to do with the Special Agent's Contract, on the other hand, she claim that FGU violated said contract which gives rise of [sic] her cause of action. Clearly, appellant's cash accountabilities cannot be the offshoot of appellee's alleged violation of the aforesaid contract. On 19 May 1999, the appellate court denied petitioner's motion for reconsideration,13 giving rise to the present petition. Before going into the substantive issues, the Court shall first dispose of some procedural matters raised by the parties. Petitioner claims that respondent is estopped from questioning her non-payment of docket fees because it did not raise this particular issue when it filed its motion - the "Motion to Strike out Answer With Compulsory Counterclaim And To Declare Defendant In Default" - with the trial court; rather, it was only nine months after receiving petitioner's answer that respondent assailed the trial court's lack of jurisdiction over petitioner's counterclaims based on the latter's failure to pay docket fees.14 Petitioner's position is unmeritorious. Estoppel by laches arises from the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it.15 In the case at bar, respondent cannot be considered as estopped from assailing
respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court." As contained in her answer, petitioner's counterclaims are as follows: (20) That defendant incorporates and repleads by reference all the foregoing allegations as may be material to her Counterclaim against FGU. (21) That FGU is liable to pay the following just, valid and legitimate claims of defendant: (a) the sum of at least P104,893.45 plus maximum interest thereon representing, among others, direct commissions, profit commissions and contingent bonuses legally due to defendant; and (b) the minimum amount of P500,000.00 plus the maximum allowable interest representing defendant's accumulated premium reserve for 1985 and previous years, which FGU has unjustifiably failed to remit to defendant despite repeated demands in gross violation of their Special Agent's Contract and in contravention of the principle of law that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." (22) That as a result of the filing of this patently baseless, malicious and unjustified Complaint, and FGU's unlawful, illegal and vindictive termination of their Special Agent's Contract, defendant was unnecessarily dragged into this litigation and to defense [sic] her side and assert her rights and claims against FGU, she was compelled to hire the services of counsel with whom she agreed to pay the amount of P30,000.00 as and for attorney's fees and stands to incur litigation expenses in the amount estimated to at least P20,000.00 and for which FGU should be assessed and made liable to pay defendant. (23) That considering further the malicious and unwarranted action of defendant in filing this grossly unfounded action, defendant has suffered and continues to suffer from serious anxiety, mental anguish, fright and humiliation. In addition to this, defendant's name, good reputation and business standing in the insurance business as well as in the community have been besmirched and for which FGU should be adjudged and made liable to pay moral damages to defendant in the amount of P300,000.00 as minimum. (24) That in order to discourage the filing of groundless and malicious suits like FGU's Complaint, and by way of serving [as] an example for the public good, FGU should be penalized and assessed exemplary damages in the sum of P100,000.00 or such amount as the Honorable Court may deem warranted under the circumstances.22 Tested against the abovementioned standards, petitioner's counterclaim for commissions, bonuses, and accumulated premium reserves is merely permissive. The evidence required to prove petitioner's claims differs from that needed to establish respondent's demands for the recovery of cash accountabilities from petitioner, such as cash advances and costs of premiums. The recovery of respondent's claims is not contingent or dependent upon establishing petitioner's counterclaim, such that conducting separate trials will not result in the substantial duplication of the time and effort of the court and the parties. One would search the records in vain for a logical connection between the parties' claims. This conclusion is further reinforced by petitioner's own admissions since she declared in her answer that respondent's cause of action, unlike her own, was not based upon the Special Agent's Contract.23 However, petitioner's claims for damages, allegedly suffered as a result of the filing by respondent of its complaint, are compulsory.24 There is no need for need for petitioner to pay docket fees for her compulsory counterclaim.25 On the other hand, in order for the trial court to acquire jurisdiction over her permissive counterclaim, petitioner is bound to pay the prescribed docket fees.26 The rule on the payment of filing fees has been laid down by the Court in the case of Sun Insurance Office, Ltd. V. Hon. Maximiano Asuncion271. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. 2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period. 3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee. The above mentioned ruling in Sun Insurance has been reiterated in the recent case of Susan v. Court of Appeals.28 In Suson, the Court explained that although the payment of the prescribed docket fees is a jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case provided the docket fees are paid within the applicable prescriptive or reglementary period. Coming now to the case at bar, it has not been alleged by respondent and there is nothing in the records to show that petitioner has attempted to evade the payment of the proper docket fees for her permissive counterclaim. As a matter of fact, after respondent filed its motion to dismiss petitioner's counterclaim based on her failure to pay docket fees, petitioner immediately filed a motion with the trial court, asking it to declare her counterclaim as compulsory in nature and therefore exempt from docket fees and, in addition, to declare that respondent was in default for its failure to answer her counterclaim.29 However, the trial court dismissed petitioner's counterclaim. Pursuant to this Court's ruling in Sun Insurance, the trial court should have instead given petitioner a reasonable time, but in no case beyond the applicable prescriptive or reglementary period, to pay the filing fees for her permissive counterclaim. Petitioner asserts that the trial court should have declared respondent in default for having failed to answer her counterclaim.30 Insofar as the permissive counterclaim of petitioner is concerned, there is obviously no need to file an answer until petitioner has paid the prescribed docket fees for only then shall the court acquire jurisdiction over such claim.31 Meanwhile, the compulsory counterclaim of petitioner for damages based on the filing by respondent of an allegedly unfounded and malicious suit need not be answered since it is inseparable from the claims of respondent. If respondent were to answer the compulsory counterclaim of petitioner, it would merely result in the former pleading the same facts raised in its complaint.32 WHEREFORE, the assailed Decision of the Court of Appeals promulgated on 23 December 1998 and its 19 May 1999 Resolution are hereby MODIFIED. The compulsory counterclaim of petitioner for damages filed in Civil Case No. 89-3816 is ordered REINSTATED. Meanwhile, the Regional Trial Court of Makati (Branch 134) is ordered to require petitioner to pay the prescribed docket fees for her permissive counterclaim (direct commissions, profit commissions, contingent bonuses and accumulated premium reserves), after ascertaining that the applicable prescriptive period has not yet set in.33 SO ORDERED.
Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-25889 January 17, 1973 see the Sierras, who agree to execute, as they did execute on January 17, 1960, another deed of sale in favor of the Laicos. The Laicos then withdrew their application for registration and filed instead a petition for the reconstitution of the title issued to Isidro Sierra. On 14 June 1960, however, the Sierras filed a complaint against Marta B. Chivi, assisted by her husband, and the Laicos in the Court of First Instance of Rizal, docketed as Civil Case No. 6184, praying that they (plaintiffs) be allowed to repurchase the land under the provisions of the Public Land Act. The Chivis and the Laicos filed their answers to the complaint and counter-claimed for damages by reason of the alleged bad faith, misrepresentation and fraudulent acts of the Sierras, as herein before recounted. The Laicos filed a cross-claim against the Chivis for collection of twice the amount of the price paid under their sales contract for the latter's failure to deliver title to the Laicos, alleging that "the defendants Chivi are/or will be liable on these warranties and condition should the plaintiffs finally obtain favorable judgment in their favor" (sic). On 12 March 1964 the Sierras and the Laicos entered into a compromise to amicably settle Civil Case No. 6184 as between themselves, stipulating therein, among other things, that the Laicos were now the absolute owners of the land and that the Sierras would withdraw their objection to the reconstitution of the patent title and that said title would be transferred in the name of the Laicos, who would pay P10,000.00 to the Sierras; that the Sierras would ask for the dismissal of Civil Case No. 6184 insofar as the Laicos were concerned and would convert their action in the case from one for repurchase to one for collection of the balance of the sales price and of damages against the Chivis; that the Laicos would pursue their cross-claim against the Chivis and in the event they obtained a favorable judgment thereon they would pay to the Sierras one-half (1/2) of any amount awarded to them in excess of the purchase price of P25,647.00. The compromise, which was executed without the knowledge of or notice to the Chivis, was approved by the trial court on 12 March 1964. On the same date the court, joint motion of the Sierras and the Laicos, dismissed witness prejudice the complaint in Civil Case No. 6184 insofar as the Laicos were concerned as well as the counter-claim of the Laicos against the Sierras. Chivi was not notified of the dismissal. The court set the case for pre-trial on 14 July 1964. Despite notice to the Sierras and the Chivis, only cross-claimant Jaime Laico and his counsel appeared, whereupon the court declared the Chivis in default and allowed Laico to present evidence on the cross-claim before the deputy clerk of court. Counsel for the Chivis filed an urgent motion for reconsideration, explaining why he failed to appear at the pre-trial, but the motion was denied. On 5 February 1965 the court rendered judgment for the Laicos, sentencing the cross-defendants to pay them a total amount of P15,000.00, plus costs, and on 1 April 1965 issued a writ of execution. Pursuant to the writ the sheriff levied upon the properties of the Chivis and issued a notice that the properties would be sold at public auction on 14 April 1965. In due time the Chivis filed with the Court of Appeal a petition for certiorari and prohibition with preliminary injunction to annul: (1) the order of the trial court authorizing the Laicos to adduce evidence ex parte on their cross-claim against Marta B. Chivi; (2) the decision rendered on said cross-claim; and (3) the order directing the issuance of a writ of execution, the levy on execution and the notice of execution sale of the properties of Chivi prayed further that the therein respondents be prohibited from conducting any further proceedings in said Civil Case No. 6184 on the ground that the trial court was without jurisdiction in the premises. Upon giving due course to the petition the Court of Appeals issued a writ of preliminary injunction, restraining the therein respondents from proceedings with the execution and with the sale at public auction set for 14 April 1965, until further order. On 31 August 1965 the Court of Appeals rendered decision declaring null and void all the proceedings on the cross-claim of the spouses Laico against Chivi, as well as the orders, decisions, writs and processes issued in connection therewith, and restraining the therein respondent Judge and sheriff of the Court of First Instance of Rizal from further proceeding in Civil Case No. 6184. The Laicos moved for reconsideration. Pending resolution of the motion for reconsideration, Marta B. Chivi died was substituted by Angelina Chivi. In an order dated 16 March 1966, the motion for reconsideration was denied. Hence, the instant appeal by certiorari brought by the Laicos. The principal issue in this case is: Could the cross-claim in this particular action stand after the complaint in the same action was dismissed with prejudice? In the resolution of this issue the following considerations are pertinent: (1) A cross-claim, as defined in Section 7 of Rule 6 is "any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein." (2) The cross-claim of the Laicos against the Chivis was for the recovery of the sum of P51,294.00, upon the allegations that according to the contract of sale between them, "should the defendants Chivi fail to transfer the title to the land in question to the VENDEE (defendant Laico) then the former shall return to the latter (the aforesaid sum) which is double the amount of the purchase price received by the defendants Chivi;" and that "the defendants Chivi are/or will be liable on these warranties and conditions should the plaintiffs (Sierras) finally obtain favorable judgment in their favor" (sic). (3) When Marta B. Chivi sold her "rights and interests" to the land in question to the Laicos on 24 May 1958 the latter knew
HON. GUILLERMO E. TORRES, as Presiding Judge of the Court of First Instance of Rizal, Branch VIII, THE PROVINCIAL SHERIFF OF THE PROVINCE OF RIZAL, JAIME E. LAICO and LUZ LOS BANOS-LAICO, petitionersappellants, vs. HON. COURT OF APPEALS, JOSE CHIVI and ANGELINA CHIVI as representative of the deceased MARTA B. CHIVI, respondents-appellees. Ernesto J. Seva for petitionersappellants. Ordonez, Cervo and Sanchez for respondents-appellees. MAKALINTAL, J.: Appeal by certiorari to review the decision of the Court of Appeals in CA-G.R. No. 35677-R, dated 31 August 1965. The facts as found, by the Court of Appeals are as follows: On 1 January 1955 the spouses Isidro Sierra and Antonia Magtaas sold a parcel of land to Marta B. Chivi, representing to her that the land was not registered either under the Land Registration Act or under the Spanish Mortgage Law and assuring her that although the land was covered by a pre-war free patent application, the application had not been approved and no patent had been issued. The Sierras made that assurance because Chivi was not willing to buy the land if it was covered by a patent, since it would then be subject to repurchase. They agreed that the purchase price of P10,800.00 was not to be fully paid until the vendors could have the land registered under Act 496. At the instance of the Sierras, Chivi filed an application for registration of the land in the Court of First Instance of Rizal. While the application was pending Chivi, on 24 May 1958, sold her rights and interests in the land to the herein petitionersspouses Jaime Laico and Luz Los Banos for P25,647.00, with the stipulation that should Chivi fail to secure and transfer title to the Laicos she would return to them twice the amount of the aforesaid purchase price. To induce the Laicos to buy Chivis rights and interests, the Sierras showed them a petition withdrawing their free patent application. The Laicos thereupon continued with the registration proceeding in substitution of Chivi, who signed a deed of transfer of her rights. In December, 1959 the Laicos discovered, and in January, 1960 Chivi learned, that a free patent title had been previously issued to Isidro Sierra as early as 26 February 1932. The Laicos went to
that Chivi had yet no registered title, and in fact substituted her in the registration proceeding which she had initiated. (4) In their counterclaim for damages against the Sierras in Civil Case No. 6184, the Laicos alleged that the "plaintiffs, in fraudulently misrepresenting to the defendants Chivi, as well as to the defendants Laico, that the land in question is unregistered and is not covered by a patent, thereby inducing the latter to purchase the land in question, which they would not have done had they known that the land is covered by a patent, should be adjudged to pay ..." (5) The warranty undertaken by Marta B. Chivi, judging by its terms and by the surrounding circumstances was in respect of the transfer of ownership not of the registered title to the Laicos. The action filed by the Sierras was not for recovery of such ownership but for the exercise of their alleged right of repurchase under the Public Land Act on the ground that the land they had sold was covered by a patent title. In other words, the filing of the action did not militate against the warranty to transfer title, for the very fact that the plaintiffs wished to enforce their alleged right of repurchase was predicated on the assumption that the title, that is, ownership, had been effectively transferred first to Chivi an subsequently by the latter to the Laicos. (6) In any event, even viewing the situation in the light most favorable to the Laicos, their cross-claim on Chivi's warranty to deliver title to them was so inextricably linked with and so utterly dependent upon the success of the complaint of the Sierras for the repurchase of the land that when the complaint was dismissed the cross-claim could not possibly survive. For as the cross-claimants themselves alleged, the cross-defendants would be liable on the warranty "should the plaintiffs finally obtain favorable judgment in their favor" (sic). The warranty became functus oficio after the Sierras, who turned out after all to have a free patent title to the land issued way back in 1932, agreed to transfer and did transfer said title to the Laicos first by the deed of sale executed directly in their favor by the Sierras on January 17, 1960, and again in the amicable settlement of the case between them. The fact that the Laicos paid P10,000.00 to the Sierras in that amicable settlement created no liability on the part of the Chivis: first, because the latter neither knew nor consented to such settlement; second, because the Laicos had already acquired the land directly, from the Sierras by virtue of the aforesaid sale of January 17, 1960; and third because the said sum of P10,000.00 was not the subject of the cross-claim against them. Apropos is the following statement of the legal principle: A cross-bill strictly speaking is one brought by a defendant in an equity suit against ... other defendants in the same suit, touching the matters in question in the original bill. It is considered as an auxiliary suit dependent upon the original bill, and can be sustained only on matters growing out of the original bill. There is a well-defined distinction between a cross-bill merely defensive in character, and one seeking affirmative relief. The dismissal of the original bill carries with it a purely defensive cross-bill but not one seeking affirmative relief. 1 The cross-claim in this case was purely defensive in nature. It arose entirely out of the complaint and could prosper only if the plaintiffs succeeded. Hence, under the principle above enunciated, it could not be the subject of independent adjudication once it lost the nexus upon which its life depended. Under the circumstances above set forth the dismissal of the cross-claim should have followed the dismissal of the complaint as a matter of course, without further proceeding; and in setting the said cross-claim for pre-trial and receiving evidence thereon and then rendering judgment against the cross-defendants the court committed such a grave abuse of discretion amounting to lack of jurisdiction correctible by certiorari. Concerning the argument that the respondents here were guilty of laches because they filed their petition for certiorari after the lapse of over 9 months from the time judgment of the Court of First Instance was rendered, respondent Court of Appeals ruled in our opinion correctly as follows: xxx xxx xxx
To the contention that the petitioners' action is barred laches, we are bound to disagree. The judgment by default was rendered on February 5, 1965. It is not known when the petitioners received copy of this judgment, but the fact is that on April 13, or after the lapse of only 2 months and 7 days from rendition of the judgment, the petition for certiorari was filed with this Court. Principally, the petition assails the decision and the writ of execution thereof which was issued on April 1. Assuming that the decision complained of was actually received by the petitioners on the date it was rendered, the intervening period to the filing of the petition is only 2 months and 7 days, which is shorter than the shortest period of 2 months and 26 days cited in the respondents' ex-parte motion for reconsideration in support of their theory of laches. And a mere 12 days intervened between the issuance of the writ of execution and the filing of the petition for certiorari. xxx xxx xxx
Parenthetically, this Court would like to state that Judge Guillermo Torres should not have been made to appear as active party-petitioner in this case, his participation having become functus oficio after the rendered judgment, and therefore his role being purely nominal in this petition. In view of the foregoing considerations, the judgment of the Court of Appeals is affirmed, without pronouncement as to costs.
Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-24399 March 28, 1969 The third-party defendant's counterclaim is hereby dismissed. (Rec. on Appeal, pp. 3-4). Only the third-party defendant appealed in due course from the judgment rendered against him in the third-party complaint. When the records were elevated to the Court of First Instance of Manila, plaintiff filed a Motion to Remand Case to the lower court, for execution of its judgment against defendant, alleging in substance that by virtue of defendant's failure to appeal, its judgment against defendant had become final and executory and was in no way affected by the appeal filed by third party defendant from the judgment in favor of defendant in the third-party complaint. 1 The Court of First Instance overruled defendant's opposition to plaintiff's motion and issued an Order granting the motion for the remand of the case to the City Court for execution of its decision against defendant, directing that thereafter the records be sent back to it "for trial de novo insofar as the thirdparty plaintiff and the third-party defendant are concerned." 2 this Court. This Order of execution is the challenged order before Court of First Instance, but it seems obvious that this applies only to the party who had taken the appeal. As against other parties adversely affected by the decision who did not appeal, the decision must be deemed to have become final and executory. A contrary view would lead to indefensible result.5 xxx xxx xxx
FIRESTONE TIRE AND RUBBER COMPANY OF THE PHILIPPINES, plaintiff-appellee, vs. FERNANDO TEMPONGKO, defendant and third-party plaintiff-appellant, ANTONIO LUNA, third-party defendant-appellee. Cornelio C. Azarcon for plaintiff-appellee. Ang, Atienza & Tabora for third-party plaintiff-appellant Fernando Tempongko. Antonio Cruz for third-party defendant-appellee Antonio Luna. TEEHANKEE, J.: The only issue of law raised in this appeal from an Order of the Court of First Instance of Manila is: where plaintiff obtained judgment in the Municipal Court against defendant who in turn obtained judgment for reimbursement against the thirdparty defendant, but only the latter appealed to the Court of First Instance, may plaintiff's judgment against defendant be deemed to have become final and executory? The record shows the following facts: In a collection action instituted in the City Court of Manila, defendant in the course of the presentation of his evidence, obtained leave to file a third-party complaint against the third-party defendant. After proper proceedings, the City Court rendered judgment on the original complaint in favor of plaintiff, and on the third-party complaint in favor of defendant, as third-party plaintiff, as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant Fernando Tempongko, ordering the latter to pay the former the sum of P1,992.40, representing the principal account, plus P200.00 stipulated interest up to January 31, 1964 and 1% interest per month from February, 1964, until the principal and interest are fully paid; ordering the defendant to pay the plaintiff the sum of P400.00 as and for attorney's fees; and the costs of suit. On the third party complaint, judgment is hereby rendered in favor of the third party plaintiff and against the third party defendant, ordering the latter to pay the former whatever amount the said third party plaintiff is ordered to pay the plaintiff in this case; plus an additional sum of P200.00 as and for attorney's fees.
Our conclusions, therefore, are: first, that because the defendant Liberty Insurance Corporation did not appeal from the adverse decision of the Municipal Court, it had no right to file the answer in question, and second, that the decision of the Municipal Court having become final and executory as against said defendant, its execution was in order. This notwithstanding, said defendant is still an active party in the appealed case because of the appeal taken by the third-party defendants from the decision of the Municipal Court in so far as it was in favor of said defendants as third-party plaintiff.6 A brief discussion of the Rule on third-party complaints and of the nature and object thereof suffices to show the rationale therefor. follows: Rule 6, section 12 defines a third-party complaint as
Defendant and third-party plaintiff-appellant's appeal is without merit. The main prop of his appeal that "(T)he appellant's third-party complaint is in effect a defense to the plaintiff's complaint against him" and that "the intimate connection of the issues involved in the principal complaint and in the third-party complaint ... is sufficient to enable the herein appellant to ventilate before the Court of First Instance his own case without the need of appealing from that aspect of the decision which directly imposes upon him the liability to pay the appellee" 3 is bereft of legal support or basis.lwphi1.et The Court a quo, therefore, correctly issued its order for execution of the judgment on the principal complaint in favor of plaintiff on the strength of this Court's ruling in Singh vs. Liberty Insurance Corporation 4 where speaking through Mr. Justice Dizon, this Court similarly disposed of an identical case: Appellant admits that it did not appeal from the decision of the Municipal Court but contends that the appeal therefrom taken by the third-party defendants insured to its benefit; that said appeal vacated the decision not only as far as third-party defendants were concerned but also with respect to the defendant, although it did not appeal; that on appeal the case should be tried de novo as if it had never been tried before, and finally, that being an appellee itself because of the judgment in its favor against the third-party defendants, it did not have to appeal from the decision of the Municipal Court. It is true, as appellant claims that an appeal from the decision of an inferior court (Municipal Court) operates to vacate said decision, thereafter the case to stand trial de novo in the
SEC. 12. Third-party complaint. A third-party complaint is a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim. The third-party complaint, is therefore, a procedural device whereby a "third party" who is neither a party nor privy to the act or deed complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiff's claim. The third-party complaint is actually independent of and separate and distinct from the plaintiff's complaint. Were it not for this provision of the Rules of Court, it would have to be filed independently and separately from the original complaint by the defendant against the thirdparty. But the Rules permit defendant to bring in a third-party defendant or so to speak, to litigate his separate cause of action in respect of plaintiff's claim against a third party in the original and principal case with the object of avoiding circuitry of action and unnecessary proliferation of lawsuits and of disposing expeditiously in one litigation the entire subject matter arising from one particular set of facts. 7 Prior leave of Court is necessary, so that where the allowance of a third-party complaint would delay the resolution of the original case, such as when the third-party defendant cannot be located 8 or where matters extraneous to the issue of possession would unnecessarily clutter a case of forcible entry, 9 or the effect would be to introduce a new and separate controversy into the action, 10 the salutary object of the rule would not be defeated, and the court should in
such cases require the defendant to institute a separate action. When leave to file the third-party complaint is properly granted, the Court renders in effect two judgments in the same case, one on the plaintiff's complaint and the other on the third-party complaint. When he finds favorably on both complaints, as in this case, he renders judgment on the principal complaint in favor of plaintiff against defendant and renders another judgment on the third-party complaint in favor of defendant as third-party plaintiff, ordering the third-party defendant to reimburse the defendant whatever amount said defendant is ordered to pay plaintiff in the case. Failure of any of said parties in such a case to appeal the judgment as against him makes such judgment final and executory. By the same token, an appeal by one party from such judgment does not inure to the benefit of the other party who has not appealed nor can it be deemed to be an appeal of such other party from the judgment against him. ACCORDINGLY, the Order of the Court a quo for the execution of the decision of the City Court of Manila in favor of plaintiff-appellee as against defendant-appellant is hereby affirmed. With costs against defendant-appellant.
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-56766 February 28, 1985 January 1977. Private respondents refused to agree to the posed new rental rates. On September 30, 1976, petitioners wrote another letter to private respondents this time informing them that general repair and renovation of the building had to be undertaken starting March 1, 1977. Private respondents again refused to allow the repair and renovation. In view thereof, written demands were made upon the private respondents to vacate the premises respectively occupied by them. Instead of vacating the premises, private respondents started to deny the title of petitioners as their lessors and filed a complaint in intervention in Civil Case No. R-14977 of the Court of First Instance of Cebu, Branch IV. This case was dismissed sometime in March 1977 but was appealed by private respondents to the then Court of Appeals. Meanwhile, and more specifically on March 9, 1977, private respondents filed this case, Civil Case No. R-15971 in the Court of First Instance of Cebu against petitioners for "Interpleader, Specific Performance, Fix Duration of Lease, Consignation with Prayer for Injunction." Within the reglementary period, petitioners filed their answer with special and affirmative defenses. After a hearing on the affirmative defenses, the trial court in its order dated January 25, 1978 1 dismissed the complaint. The pertinent portion of the order of dismissal readsAfter a careful scrutiny of the allegations and arguments of the parties, in support of and against the motions under consideration, the Court finds no cogent reason to proceed with this interpleader case against the defendant Heirs of Yu Tiong, considering that the plaintiffs have all along been paying the rentals to them without objection from defendant-oppositors Ronnie Yu, Evangelista Yu, Rosario Yu, Ignacia Yu and Sonny Yu which clearly shows that plaintiffs and said defendant-oppositors have recognized the rights of co-ownership of the defendant Heirs Yu Tiong over the property in question. There is, therefore, no legal justification in requiring them to interplead their rights in the instant case. With respect to the defendant Heirs of Yu Sun, there is also no valid reason to proceed with this case as there is actually an earlier which is now pending appeal in the Court of Appeals. In the case of defendant-oppositor Ronnie Yu, the City Court of Cebu, Branch VIII, has rendered judgment in Civil Case No. R17491, dismissing his claim of co-ownership over the property involved. In fact, his appeal from that decision to this Court was dismissed and which order. of dismissal is now the subject of a certiorari proceedings in the Court of Appeals. Under Sec. 1(3) of Rule 16, Rules of Court, pendency of another action between the same parties for the same cause is a ground for the dismissal of an action, provided that: (1) there is Identity of parties, or at least such as representing the same interest in both actions; (2) Identity of rights asserted or relief prayed for, the relief being founded on the same facts; (3) and the Identity on the two preceding particulars should be such that any judgment which may be rendered on the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. (Francisca Vda. de Blas, L-5073, May 4, 1953; Diana v. B.T.C., 49 O.G. 2238) The fact that the parties in Civil Case No. R-14977, Civil Case No. R-17491 and this case are not exactly Identical will not prevent the action from being dismissed if there is Identity of issue. Since the Identity of parties is not a mere matter of form, but of substance, the rule of res judicata should not be defeated by minor differences of parties. Thus, where the issues in separate suits are the same, the fact that the parties are not precisely Identical is not necessarily fatal to the conclusive effect of prior judgment. In applying the rule, the Courts have allowed themselves a good deal of latitude observing the spirit thereof rather than the letter and there are some well recognized exceptions to or modifications of it. (50 C.J.S., 291-292) Likewise, there is no merit to the contention of the defendantoppositors that the dispositive portion of the decision rendered in Civil Case No. R-17491 did not contain any declaration that the defendant-movants are the owners of the property to the exclusion of the defendant-oppositors for it has been held that: No strict formality in the language is necessary to express the adjudication of the court. The judgment is tested by its substance rather than its form. It is sufficient if the entry shows that the issue between the parties has been passed upon by the court and the merits of the case finally determined. (Melton vs. St. Louie, I.M. & S.R. Co., 99 Ark. 433; 139 S.W. 289 Lutrell vs. Reynolds, 63 Ark. 254; 37 S.W. 1051; Policarpio v. Philippine Veterans Bank, et al., 106 Phil. 125). The determinative factor is the intention of the court as gathered from all parts of the judgment itself. In applying the rule, effect must be given to that which is unavoidably and necessarily implied in a judgment, as well as to that which is expressed in the most appropriate language. (Am. Jur. 212-213; Falcon vs. Arca, 8 SCRA 591). Furthermore, in the case of Leoncia D. Aguirre, et al., versus Vicente Aguirre, et al., (58 SCRA 461-466), the Highest Tribunal, speaking through the Honorable Justice Antonio Barredo, posited the rule that 'in interpreting the rights settled in a decision, the tenor of the opinion and the ratiocination in the decision should be resorted to, to get the intention of the court. Likewise, if what appears in the dispositive portion is absurd if set against what appears in other parts of the decision, construction of judgment might be sanctionable notwithstanding jurisprudence to the effect that it is the dispositive part of a decision that controls irrespective of what might appear in the opinion part thereof.
CRESENCIO YU, EMETERIO YU, YU CHIN HOCK, ROBERT YU, ROSITA YU, ANITA YU, VALENTINO YU, TERESITA YU, YU CHU HA, PATROCINIO YU, ANITA ABELLANOSA, ONG OH, RONNIE YU, SONNY YU, SALLY YU, RENATO YU. YU ENG TOY, ROSARIO YU, YU CHIN, IGNACIA YU, EVANGELISTA YU, FILOMENO YU and DONATO YU, petitioners, vs. HONORABLE COURT OF APPEALS, ROSETTE'S STORE and/or FLORENCIA CALIENTA; TAY THONG TRADING and/or CHUA CHUN; CHU HOC TRADING and/or JAIME TAN; SIN TICK HING and/or SY PAN; CEBU OVERSEA COMPANY and/or GREGORIA ABELLANOSA; STEPHEN ENTERPRISES and/or ALBERTO GO; CONEY TEXTILE and/or TAN BING; VICKEY MARKETING; KIAN AN TRADING and/or J.T. LUA; PURITY BAZAAR and/or VICTORIA GUEVARRA CO; MARGIE'S FASHION HOUSE and/or TAN LAM; EVERET SHOE CENTER and/or GO, CHUN; LAO ENG CHEONGS SONS CO.; and PO'S ELECTRICAL SUPPLY, EMA ENTERPRISES and/or PO IM, respondents. Benedicto H. Alo for all private respondents. CUEVAS, J.: Petitioners in this special civil action of certiorari and PROHIBITION seek to annul and set aside for allegedly having been issued with grave abuse of discretion amounting to lack of jurisdiction, the Resolutions of the then Court of Appeals (now the Intermediate Appellate Court) dated October 13, 1980 and March 17, 1981 issued in CA-G.R. No. 65149-R. Petitioners likewise pray that pending resolution of this petition on its merit, a temporary restraining order be issued enjoining the respondents from enforcing the said questioned resolutions. Petitioners are respectively the Heirs of Yu Tiong and Yu Sun and are co-owners of the lot and the commercial building standing thereon covered by Transfer Certificate of Title No. 58345 of the Register of Deeds of Cebu City. Private respondents, on the other hand, are occupying separate portions of the aforesaid property as lessees thereof, pursuant to a verbal contract of lease on a "month-to-month basis" entered into by them with petitioners, and as such lessees, private respondents were paying one-half () of the agreed rentals to the heirs of Yu Tiong and the other one-half () to the heirs of Yu Sun. On July 22, 1976, petitioners wrote private respondents informing them that they are increasing the rentals to take effect on
Anent the plaintiffs' second cause of action which is to fix the period of the lease and the amount of rentals, it was held by the honorable Supreme Court in the case of Lim Si vs. Lim, L-84961, April 25, 1956, that consignation under Art. 1256 of the Civil Code is not the proper proceeding to determine the relation between landlord and tenant, the period of life of the lease or tenancy, the reasonableness of the amount of rental, the right of the tenant to keep the premises against the will of the landlord, which are to be decided not in action of consignation but in that of unlawful detainer that the lessor institute when the lessee refuses to pay the rents he has fixed for the property. From this, it is very clear that plaintiffs' cause of action for the fixing of the period of lease and the amount of rentals cannot stand legal scrutiny. Private respondents appealed the aforesaid order of dismissal to the then Court of Appeals under CA-G.R. No. 65149-R. On November 23, 1979, petitioners filed before respondent Court of Appeals a Motion to Dismiss private respondents' appeal on the ground that their record on appeal was filed out of time. 2 In a Resolution dated November 27, 1979, respondent Court of Appeals admitted private respondents' record on appeal and required them at the same time to file their appellants' brief within a period of forty five (45) days. On February 25, 1980, on motion of private respondents for an extension of time to file brief, they were granted an unextendible period of ninety (90) days, to expire on May 15, 1980. Private respondents failed to file the required brief within this period. Consequently, on August 21, 1980, respondent Court of Appeals issued the following Resolution Considering that despite receipt by counsel for the plaintiffsappellants of the resolution of this court granting them a nonextendible period of 90 days within which to file appellants' brief, no brief was filed up to this date, the Court RESOLVED to CONSIDER the appeal on the above-entitled case ABANDONED and DISMISSED. 3 On September 10, 1980, private respondents filed a "Motion to Reconsider Order of Dismissals of Appeal and to Admit Attached Brief of Appellants", alleging as grounds therefor, the following3. That the brief could not be filed earlier, as the case was referred back to Carlos Po (in his lifetime) by counsel so that another counsel would appear and make the brief, but as it appears now, this never happened and the records were all kept in the file of the deceased and which is the main reason for the non-filing thereof. xxx xxx xxx 5. That the preparation of the brief would not have been delayed were it not for the untimely death of Carlos Po on May 14, 1980. xxx xxx xxx that the brief could not be filed earlier, as the case was referred back to Carlos Po (in his lifetime) by counsel, so that another counsel would appear and make the brief, but as it appears now, this never happened and the records were all kept in the files of the deceased, and which is the reason for the non-filing thereof. The above explanation of counsel, Atty. Benedicto H. Alo, is far from being satisfactory. If there were really moves to replace him as counsel and that for this reason he was unable to file the briefs on time, it was his duty to inform respondent Court of Appeals of said fact. When counsel did not file the brief for the accused because the latter's parents had considered retaining the services of another lawyer for that purpose, the least that was expected of counsel of record was that he should inform this tribunal of the developments set forth in his explanation and ask that he be allowed to withdraw as counsel. 11 An examination of the records of this case failed to reveal any withdrawal made and formally filed by Atty. Benedicto H. Alo as counsel for private respondents. Neither has there been a valid substitution of counsel which maybe allowed only upon compliance with the following requirements: (1) filing of a written application for substitution; (2) written consent of the client; (3) written consent of the lawyer to be substituted, if such consent can be obtained; and (4) in case such written consent cannot be procured, then application for substitution must be accompanied with proof of the service of notice of such motion in the manner required by the rules, on the attorney to be substituted. 12 There being no withdrawal nor substitution of counsel made, Atty. Benedicto H. Alo remains as counsel for private respondents and for his failure to file the required briefs on time, his clients (herein private respondents) should suffer the consequences thereof. For, it is settled that clients are bound by the mistakes, negligence and omission of their counsels. 13 But what militates very heavily against the reinstatement of respondents' appeal is its utter lack of merit. We see no prospect of the Order sought to be appealed, being reversed or at least modified. From the assailed Order which is herein earlier quoted, it is clear that private respondents' action is one of "Interpleader, Specific Performance, Fix Duration of Lease, Consignation with Prayer for Injunction." The trial court ruled, after hearing on the affirmative defenses and on the motion to dismiss, that the matters intended to be litigated are not contentious since private respondents had, all the while been "paying the rentals to the heirs of Yu Tiong without objection from defendant-oppositors. With respect to the heirs of Yu Sun, there is actually an earlier interpleader case filed by the same parties." Besides, "consignation under Art. 1256 of the Civil Code is not the proper proceeding to determine the relationship between landlord and tenant." Moreover, it is not disputed that private respondents' stay on the leased premises, is on a "month-to-month" basis, and as such, the lessors (herein petitioners) may terminate the lease at the end of every month. 14 The records show that as early as
7. That there was no intent to delay or frustrate this appeal and that plaintiffs-appellants have all interest to have this appeal prosecuted to its end, and that they seek the liberality of the Honorable Court in the application of the rules, in the interest of justice that their appeal be allowed or reinstated and that the non-filing on time of the brief was purely due to accident, i.e., the death of Carlos Po. 4 This motion was opposed by petitioners 5 but in a Resolution dated October 13, 1980, (one of the assailed resolutions) respondent Court of Appeals reconsidered its previous Resolution dismissing the appeal and admitted private respondents' brief. 6 Petitioners moved to reconsider said resolution alleging mainly that the appeal of private respondents is "frivolous and dilatory." 7 Respondent Court of Appeals in its Resolution dated March 17, 1981 (the second questioned resolution) denied petitioners' motion for reconsideration. 8 Hence, the instant petition, petitioners contending that the two questioned resolutions dated October 13, 1980 9 and March 17, 1981 10 are null and void having been issued with grave abuse of discretion amounting to lack of jurisdiction. On June 19, 1981, We required respondents to comment on the petition and issued a temporary restraining order enjoining respondents from enforcing and/or implementing the questioned resolutions. In a subsequent Resolution dated August 31, 1981, We gave due course to the petition and required the parties to file their respective memoranda. We view the circumstances narrated above as justifying the setting aside of the questioned resolutions of respondent Court of Appeals. We find merit in the petition and consequently grant the reliefs prayed for by the petitioners. The records show that the extended period granted to the private respondents within which to file their brief expired on May 15,1980. The period granted lapsed without counsel having filed the required appellants 'brief nor having explained his failure to do so. Consequently, the appeal was considered "dismissed" and "abandoned" in the resolution of respondent Court dated August 21, 1980. It was only on September 15, 1980 or after a period of four (4) months from the due date that private respondents through counsel, Atty. Benedicto H. Alo, (who was the same counsel of private respondent in the lower court) mailed their brief, after receiving on September 4, 1980, the resolution of respondent Court dismissing the appeal. The reason advanced by counsel for private respondents runs thus-
10
September 1976, demands were made by petitioners upon private respondents as lessees, to vacate the leased premises. Instead of vacating the premises, private respondents filed several cases of Interpleader and consignation of rentals, aside from this instant case, before several branches of the Court of First Instance of Cebu. 15 No doubt, said cases were resorted to by private respondents in order to prolong their stay in the leased premises to the prejudice of the owners, herein petitioners. To sustain, therefore, the reinstatement of private respondents' appeal and remand the case to respondent court for further proceeding will serve no purpose whatsoever. Rather, it will only impair the speedy administration of justice, private respondents' appeal from the order of the trial court dismissing their complaint, being manifestly frivolous and completely devoid of merit. 16 WHEREFORE, the petition is GRANTED. The questioned Resolutions of the Court of Appeals dated October 13, 1980 and March l7, 1981 are here by SET ASIDE and REVERSED. Civil Case No. R-15971 of the Court of First Instance of Cebu, Branch XII is hereby ordered DISMISSED. No pronouncement as to costs. SO ORDERED.
11
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 141947 July 5, 2001 taking note of possible procedural errors, they claimed that while they were notified of their termination, PEPSI had not shown that the Department of Labor and Employment (DOLE) was also notified as mandated by Art. 283 of the Labor Code which statesArt. 283. Closure of Establishment and Reduction of Personnel. The employer may also terminate the employment of any employee due to the installation of labor-saying devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this title, by serving a written notice on the worker and the Ministry of Labor and Employment: at least one (1) month before the intended date thereof xxxx (italic supplied). PEPSI, on the other hand, maintained that termination due to redundancy was a management prerogative the wisdom and soundness of which were beyond the discretionary review of the courts. Thus, it had the right to manage its affairs and decide which position was no longer needed for its operations. It further maintained that the redundancy program was made in good faith and was not implemented to purposely force certain employees out of their employment. It also claimed that a close perusal of the job descriptions of both the CDS and ADM positions would show that the two (2) were very different in terms of the nature of their functions, areas of concerns, responsibilities and qualifications.4 On 18 June 1997, Labor Arbiter Romulus S. Protacio dismissed the complaint for lack of merit. Furthermore, he ruled that the one (1)-month written notice prior to termination required by Art. 283 was complied with. On appeal, the National Labor Relations Commission (NLRC) affirmed the ruling of the Labor Arbiter. However, in its Decision5 dated 5 March 1999 it found that the Establishment Termination Report was submitted to the DOLE only on 5 April 1995 or two "(2) months after the termination had already taken place6 and thus effectively reversing the finding of the Labor Arbiter that the required one (1)-month notice prior to termination was complied with. Nonetheless, the NLRC dismissed the appeal, citing International Hardware, Inc. v. NLRC,7 which held x x x x if an employee consented to his retrenchment or voluntarily applied for retrenchment with the employer due to the installation of labor-saving devices, redundancy, closure or cessation of operation or to prevent financial losses to the business of the employer, the required previous notice to the DOLE is not necessary as the employee thereby acknowledged the existence of a valid cause for termination of his employment x x x x (italics supplied). On 10 September 1999, petitioners filed a special civil action for certiorari with the Court of Appeals.8 The Court of Appeals in the assailed Resolution dismissed the petition outright for failure to comply with a number of requirements mandated by Sec. 3, Rule 46, in relation to Sec. 1, Rule 65, of the 1997 Rules of Civil Procedure. Respondent appellate court found that the verification and certification against forum shopping were executed merely by petitioners' counsel and not by petitioners. The petition also failed to specify the dates of receipt of the NLRC Decision as well as the filing of the motion for reconsideration.9 Under the aforecited Rules, failure of petitioners to comply with any of the requirements was sufficient ground for the dismissal of the petition. Petitioners now present the sole issue of whether there was failure to comply with the requirements of the Rules in filing their petition for certiorari. We find no manifest error on the part of the Court of Appeals; hence we affirm. It is true that insofar as verification is concerned, we have held that there is substantial compliance if the same is executed by an attorney it being presumed that facts alleged by him are true to his knowledge and belief.10 However the same does not apply as regards the requirement of a certification against forum shopping. Section 3, Rule 46 of the 1997 Rules of Civil Procedure explicitly requires x x x x The petitioner shall also submit together with the petition a sworn certification that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five (5) days therefrom x x x x It is clear from the above-quoted provision that the certification must be made by petitioner himself and not by counsel since it is petitioner who is in the best position to know whether he has previously commenced any similar action involving the same issues in any other tribunal or agency.11 Petitioners argue that while it may be true that they are in the best position to know whether they have commenced an action or not this information may be divulged to their attorney and there is nothing anomalous or bizarre about this disclosure.12 They further maintain that they executed a Special Power of Attorney specifically to authorize their counsel to execute the certification on their behalf. We are aware of our ruling in BA Savings Bank v. Sia13 that a certification against forum shopping may be signed by an authorized lawyers who has personal knowledge of the facts required to be disclosed in such document. However, BA Savings Bank must be distinguished from the case at bar because in the former, the complainant was a corporation, and hence, a juridical person. Therefore, that case made an exception to the general
ISMAEL V. SANTOS, ALFREDO G. ARCE and HILARIO M. PASTRANA, petitioners, vs. COURT OF APPEALS, PEPSI COLA PRODUCTS PHILS., INC., LUIS P. LORENZO, JR. and FREDERICK DAEL, respondents. BELLOSILLO, J.: This petition for review seeks to annul the Resolution1 of the Court of Appeals in CA-G.R. SP No. 54853 dated 28 September 1999 which summarily dismissed petitioners' special civil action for certiorari for failing to execute properly the required verification and certification against forum shopping and to specify the material dates from which the timeliness of the petition may be determined. Private respondent Pepsi Cola Products Phils., Inc. (PEPSI) is a domestic corporation engaged in the production, distribution and sale of beverages. At the time of their termination, petitioners Ismael V. Santos and Alfredo G. Arce were employed by PEPSI as Complimentary Distribution Specialists (CDS) with a monthly salary of P 7,500.00 and P10,000.00, respectively, while Hilario M. Pastrana was employed as Route Manager with a monthly salary of P 7 ,500.00. In a letter dated 26 December 1994,2 PEPSI informed its employees that due to poor performance of its Metro Manila Sales Operations it would restructure and streamline certain physical and sales distribution systems to improve its warehousing efficiency. Certain positions, including that of petitioners, were declared redundant and abolished. Consequently, employees with affected positions were terminated. On 15 January 1995 petitioners left their respective positions, accepted their separation pays and executed the corresponding releases and quitclaims. However, before the end of the year, petitioners learned that PEPSI created new positions called Account Development Managers (ADM) with substantially the same duties and responsibilities as the CDS. Aggrieved, on 15 Apri1 1996, petitioners filled a complaint with the Labor Arbiter for illegal dismissal with a prayer for reinstatement, back wages, moral and exemplary damages and attorney's fees. In their complaint, petitioners alleged that the creation of the new positions belied PEPSI's claim of redundancy. They further alleged that the qualifications for both the CDS and ADM positions were similar and that the employees hired for the latter positions were even less qualified than they were.3 Likewise
12
rule that the certification must be made by the petitioner himself since a corporation can only act through natural persons. In fact, physical actions, e.g., signing and delivery of documents, may be performed on behalf of the corporate entity only by specifically authorized individuals. In the instant case, petitioners, are all natural persons and there is no showing of any reasonable cause to justify their failure to personally sign the certification.14 It is noteworthy that PEPSI in its Comment stated that it was petitioners themselves who executed the verification and certification requirements in all their previous pleadings. Counsel for petitioners argues that as a matter of policy, a Special Power of Attorney is executed to promptly and effectively meet any contingency relative to the handling of a case. This argument only weakens their position since it is clear that at the outset no justifiable reason yet existed for counsel to substitute petitioners in signing the certification. In fact, in the case of natural persons, this policy serves no legal purpose. Convenience cannot be made the basis for a circumvention of the Rules. Neither are we convinced that the out-right dismissal of the petition would defeat the administration of justice. Petitioners argue that there are very important issues such as their livelihood and the well being and future of their families.15 Every petition filed with a judicial tribunal is sure to affect, even tangentially, either the well being and future of petitioner himself or that of his family. Unfortunately, this does not warrant disregarding the Rules. Moreover, the petition failed to indicate the material dates that would show the timeliness of the filing thereof with the Court of Appeals. There are three (3) essential dates that must be stated in a petition for certiorari brought under Rule 65. First, the date when notice of the judgment or final order or Resolution was received; second, when a motion for new trial or reconsideration was filed; and third, when notice of the denial thereof was received. Petitioners failed to show the first and second dates, namely, the date of receipt of the impugned NLRC Decision as well as the date of filing of their motion for reconsideration. Petitioners counter by stating that in the body of the petition for certiorari filed in the Court of Appeals, it was explicitly stated that the, NLRC Resolution dated 11 May 1999 was received by petitioners through counsel on 30 July 1999. They even reiterate this contention in their Reply. The requirement of setting forth the, three(3) dates in a petition for certiorari under Rule 65 is for the purpose of determining its timeliness. Such a petition is required to be filed not later than sixty (60) days from notice of the judgment, order or Resolution sought to be assailed.16 Therefore, that the petition for certiorari was filed forty-one (41) days from receipt of the denial of the motion for reconsideration is hardly relevant. The Court of Appeals was not in any position to determine when this period commenced to run and whether the motion for reconsideration itself was filed on time since the material dates were not stated. It should not be assumed that in no event would the motion be filed later than fifteen (15) days. Technical rules of procedure are not designed to frustrate the ends of justice. These are provided to effect the proper and orderly disposition of cases and thus effectively prevent the clogging of court dockets. Utter disregard of the Rules cannot justly be rationalized by harking on the policy of liberal construction. 17 But even if these procedural lapses are dispensed with, the instant petition, on the merits, must still fail. Petitioners impute grave abuse of discretion on the part of the NLRC for holding that the CDS and ADM positions were dissimilar, and for concluding that the redundancy program of PEPSI was undertaken in good faith and that the case of International Hardware v. NLRC18 was applicable. This Court is not a trier of facts. The question of whether the duties and responsibilities of the CDS and ADM positions are similar is a question properly belonging to both the Labor Arbiter and the NLRC. In fact, the NLRC merely affirmed the finding of the Labor Arbiter on this point and further elaborated on the differences between the two (2). Thus it ruled x x x x We cannot subscribe to the complainants' assertions that the positions have similar job descriptions. First CDS report to a CD Manager, whereas the ADMs do not report to the CD Manager, leading us to believe that the organizational setup of the sales department has been changed. Second, CDS are filed personnel who drive assigned vehicles and deliver stocks to "dealers" who, under the job description are those who sell and deliver the same stocks to smaller retail outlets in their assigned areas. The ADMs are not required to drive trucks and they do not physically deliver stocks to wholesale dealers. Instead, they help "dealers" market the stocks through retail. This conclusion is borne out by the fact (that) ADMs are tasked to ensure that the stocks are displayed in the best possible locations in the dealer's store, that they have more shelf space and that dealers participate in promotional activities in order to sell more products. It is clear to us that while CDS are required to physically deliver, sell and collect payments for softdrinks, they do so not primarily to retail outlets but to wholesale dealers who have retail customers of their own. They are not required to assist the dealers they deliver to in selling the softdrinks more effectively whereas ADMs sell softdrinks to big retail outlets (groceries and malls who have shelves and display cases and who require coolers and other paraphernalia). They do not only sell but they have to effectively market the products or put them in the best and most advantageous light so that the dealers who sell the softdrinks retails can sell more softdrinks. The main thrust of the ADMs job is to ensure that the softdrinks products ordered from them are marketed in a certain manner ("Pepsi-Way standards") in keeping with the promotional thrust of the company. Factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported by substantial evidence,19 defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.20 In this case, there is no doubt that the findings of the NLRC are supported by substantial evidence. The job descriptions submitted by PEPSI are replete with information and is an adequate basis to compare and contrast the two (2) positions. Therefore, the two (2) positions being different, it follows that the redundancy program instituted by PEPSI was undertaken in good faith. Petitioners have not established that the title Account Development Manager was created in order to maliciously terminate their employment. Nor have they shown that PEPSI had any ill motive against them. It is therefore apparent that the restructuring and streamlining of PEPSI's distribution and sales systems were an honest effort to make the company more efficient. Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands of the enterprise.21 A redundant position is one rendered superfluous by a number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of a service previously undertaken by the business.22 Based on the fact that PEPSI's Metro Manila Sales Operations were not meeting its sales targets,23 and on the fact that new positions were subsequently created, it is evident that PEPSI wanted to restructure its organization in order to include more complex positions that would either absorb or render completely unnecessary the positions it had previously declared redundant. The soundness of this business judgment of PEPSI has been assailed by petitioners, arguing that it is more logical to implement new procedures in physical distribution, sales quotas, and other policies aimed at improving the performance of the division rather than to reduce the number of employees and create new positions.24 This argument cannot be accepted. While it is true that management may not, under the guise of invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure, the same must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown. Similarly, in Wiltshire File Co., Inc. v. NLRC25 petitioner company effected some changes in its organization by abolishing the position of Sales Manager and simply adding the duties previously discharged by it to the duties of the General Manager to whom the Sales Manager used to report. In that case, we held that the characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision is not subject to discretionary review on the part of the Labor Arbiter or of the NLRC so long as no violation of law or arbitrary and malicious action is indicated.
13
In the case at bar, no such violation or arbitrary action was established by petitioners. The subject matter being well beyond the discretionary review allowed by law, it behooves this Court to steer clear of the realm properly belonging to the business experts. We agree with the NLRC in its application of International Hardware v. NLRC that the mandate one (1) month notice prior to termination given to the worker and the DOLE is rendered unnecessary by the consent of the worker himself. Petitioners assail the voluntariness of their consent by stating that had they known of PEPSI's bad, faith they would not have agreed to their termination, nor would they have signed the corresponding releases and quitclaims.26 Having established private respondent's good faith in undertaking the assailed redundancy program, there is no need to rule on this contention. Finally, in a last ditch effort to plead their case, petitioners would want us to believe that their termination was illegal since PEPSI did not employ fair and reasonable criteria in implementing its redundancy program. This issue was not raised before the Labor Arbiter nor with the NLRC. As it would be offensive to the basic rules of fair play and justice to allow a party to raise a question which has not been passed upon by both administrative tribunals,27 it is now too late to entertain it.1wphi1.nt WHEREFORE, in the absence of any reversible error on the part of the Court of Appeals, the petition is DENIED. The assailed Resolution dated 28 September 1999 which summarily dismissed petitioner's special civil action for certiorari for non-compliance with Sec. 13, Rule 46, in relation to Sec. 1, Rule 65, of the 1997 Rules of Civil Procedure is AFFIRMED. SO ORDERED.
Republic of the Philippines SUPREME COURT
14
Manila FIRST DIVISION G.R. No. 165849 December 10, 2007 DECISION SANDOVAL-GUTIERREZ, J.: Before us are five (5) consolidated cases which stemmed from Civil Case No. 04-109444 filed with the Regional Trial Court (RTC), Branch 24, Manila, subsequently re-raffled to Branch 461 and eventually to Branch 25.2 The instant controversies arose from a family dispute. Gilbert Guy is the son of Francisco and Simny Guy. Geraldine, Gladys and Grace are his sisters. The family feud involves the ownership and control of 20,160 shares of stock of Northern Islands Co., Inc. (Northern Islands) engaged in the manufacture, distribution, and sales of various home appliances bearing the "3-D" trademark. Simny and her daughters Geraldine, Gladys and Grace, as well as Northern Islands and Emilia Tabugadir, have been impleaded as respondents in the above-entitled cases. Northern Islands is a family-owned corporation organized in 1957 by spouses Francisco and respondent Simny Guy. In November 1986, they incorporated Lincoln Continental Development Corporation, Inc. (Lincoln Continental) as a holding company of the 50% shares of stock of Northern Islands in trust for their three (3) daughters, respondents Geraldine, Gladys and Grace. Sometime in December 1986, upon instruction of spouses Guy, Atty. Andres Gatmaitan, president of Lincoln Continental, indorsed in blank Stock Certificate No. 132 (covering 8,400 shares) and Stock Certificate No. 133 (covering 11,760 shares) and delivered them to Simny. In 1984, spouses Guy found that their son Gilbert has been disposing of the assets of their corporations without authority. In order to protect the assets of Northern Islands, Simny surrendered Stock Certificate Nos. 132 and 133 to Emilia Tabugadir, an officer of Northern Islands. The 20,160 shares covered by the two Stock Certificates were then registered in the names of respondent sisters, thus enabling them to assume an active role in the management of Northern Islands. On January 27, 2004, during a special meeting of the stockholders of Northern Islands, Simny was elected President; Grace as Vice-President for Finance; Geraldine as Corporate Treasurer; and Gladys as Corporate Secretary. Gilbert retained his position as Executive Vice President. This development started the warfare between Gilbert and his sisters. On March 18, 2004, Lincoln Continental filed with the RTC, Branch 24, Manila a Complaint for Annulment of the Transfer of Shares of Stock against respondents, docketed as Civil Case No. 04-109444. The complaint basically alleges that Lincoln Continental owns 20,160 shares of stock of Northern Islands; and that respondents, in order to oust Gilbert from the management of Northern Islands, falsely transferred the said shares of stock in respondent sisters names. Lincoln Continental then prayed for an award of damages and that the management of Northern Islands be restored to Gilbert. Lincoln also prayed for the issuance of a temporary restraining order (TRO) and a writ of preliminary mandatory injunction to prohibit respondents from exercising any right of ownership over the shares. On June 16, 2004, Lincoln Continental filed a Motion to Inhibit the Presiding Judge of Branch 24, RTC, Manila on the ground of partiality. In an Order dated June 22, 2004, the presiding judge granted the motion and inhibited himself from further hearing Civil Case No. 04-109444. It was then re-raffled to Branch 46 of the same court. On July 12, 2004, Branch 46 set the continuation of the hearing on Lincoln Continentals application for a TRO. On July 13, 2004, respondents filed with the Court of Appeals a Petition for Certiorari and Mandamus, docketed as CA-G.R. SP No. 85069, raffled off to the Tenth Division. Respondents alleged that the presiding judge of Branch 24, in issuing the Order dated June 22, 2004 inhibiting himself from further hearing Civil Case No. 04-109444, and the presiding judge of Branch 46, in issuing the Order dated July 12, 2004 setting the continuation of hearing on Lincoln Continentals application for a TRO, acted with grave abuse of discretion tantamount to lack or excess of jurisdiction. Meanwhile, on July 15, 2004, the trial court issued the TRO prayed for by Lincoln Continental directing respondents to restore to Gilbert the shares of stock under controversy. In the same Order, the trial court set the hearing of Lincoln Continentals application for a writ of preliminary injunction on July 19, 20, and 22, 2004. On July 16, 2004, the Court of Appeals (Tenth Division) issued a TRO enjoining Branch 46, RTC, Manila from enforcing, maintaining, or giving effect to its Order of July 12, 2004 setting the hearing of Lincoln Continentals application for a TRO. Despite the TRO, the trial court proceeded to hear Lincoln Continentals application for a writ of preliminary injunction. This prompted respondents to file in the same CA-G.R. SP No. 85069 a Supplemental Petition for Certiorari, Prohibition, and Mandamus seeking to set aside the Orders of the trial court setting the hearing and actually hearing Lincoln Continentals application for a writ of preliminary injunction. They prayed for a TRO and a writ of preliminary injunction to enjoin the trial court (Branch 46) from further hearing Civil Case No. 04-109444. On September 17, 2004, the TRO issued by the Court of Appeals (Tenth Division) in CA-G.R. SP No. 85069 expired. On September 20, 2004, Gilbert filed a Motion for Leave to Intervene and Motion to Admit Complaint-in-Intervention in Civil Case No. 04-109444. In its Order dated October 4, 2004, the trial court granted the motions. Meantime, on October 13, 2004, the trial court issued the writ of preliminary mandatory injunction prayed for by Lincoln Continental in Civil Case No. 04-109444.
GILBERT G. GUY, Petitioner, vs. THE COURT OF APPEALS (8th DIVISION), NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GLADYS G. YAO, and EMILIA TABUGADIR, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 170185 IGNACIO AND IGNACIO LAW OFFICES, Petitioner, vs. THE COURT OF APPEALS (7th DIVISION), NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GLADYS G. YAO, and EMILIA A. TABUGADIR, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 170186 SMARTNET PHILIPPINES, Petitioner, vs. THE COURT OF APPEALS (7th DIVISION), NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GLADYS G. YAO, and EMILIA A. TABUGADIR, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 171066 LINCOLN CONTINENTAL DEVELOPMENT CO., INC., Petitioner, vs. NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GRACE G. CHEU, GLADYS G. YAO, and EMILIA A. TABUGADIR, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 176650 LINCOLN CONTINENTAL DEVELOPMENT COMPANY, INC., Petitioner, vs. NORTHERN ISLANDS CO., INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GRACE G. CHEU, GLADYS G. YAO, and EMILIA A. TABUGADIR, Respondents.
15
On October 20, 2004, the Court of Appeals (Tenth Division) denied respondents application for injunctive relief since the trial court had already issued a writ of preliminary injunction in favor of Lincoln Continental. Consequently, on October 22, 2004, respondents filed with the Tenth Division a Motion to Withdraw Petition and Supplemental Petition in CA-G.R. SP No. 85069. On October 26, 2004, respondents filed a new Petition for Certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 87104, raffled off to the Eighth Division. They prayed that the TRO and writ of preliminary injunction issued by the RTC, Branch 46, Manila be nullified and that an injunctive relief be issued restoring to them the management of Northern Islands. They alleged that Gilbert has been dissipating the assets of the corporation for his personal gain. On October 28, 2004, the Court of Appeals Eighth Division issued a TRO enjoining the implementation of the writ of preliminary injunction dated October 13, 2004 issued by the trial court in Civil Case No. 04-109444; and directing Lincoln Continental to turn over the assets and records of Northern Islands to respondents. On November 2, 2004, respondents filed with the appellate court (Eighth Division) an Urgent Omnibus Motion praying for the issuance of a break-open Order to implement its TRO. On November 4, 2004, the Eighth Division issued a Resolution granting respondents motion. Pursuant to this Resolution, respondents entered the Northern Islands premises at No. 3 Mercury Avenue, Libis, Quezon City. On November 18, 2004, Gilbert filed with this Court a petition for certiorari, docketed as G.R. No. 165849, alleging that the Court of Appeals (Eighth Division), in granting an injunctive relief in favor of respondents, committed grave abuse of discretion tantamount to lack or in excess of jurisdiction. The petition also alleges that respondents resorted to forum shopping. Meanwhile, on December 16, 2004, Smartnet Philippines, Inc. (Smartnet) filed with the Metropolitan Trial Court (MeTC), Branch 35, Quezon City a complaint for forcible entry against respondents, docketed as Civil Case No. 35-33937. The complaint alleges that in entering the Northern Islands premises, respondents took possession of the area being occupied by Smartnet and barred its officers and employees from occupying the same. Likewise on December 16, 2004, Ignacio and Ignacio Law Offices also filed with Branch 37, same court, a complaint for forcible entry against respondents, docketed as Civil Case No. 34106. It alleges that respondents forcibly occupied its office space when they took over the premises of Northern Islands. On December 22, 2004, the Eighth Division issued the writ of preliminary injunction prayed for by respondents in CA-G.R. SP No. 87104. Subsequently, the presiding judge of the RTC, Branch 46, Manila retired. Civil Case No. 04-109444 was then re-raffled to Branch 25. On January 20, 2005, respondents filed with the Eighth Division of the appellate court a Supplemental Petition for Certiorari with Urgent Motion for a Writ of Preliminary Injunction to Include Supervening Events. Named as additional respondents were 3-D Industries, Judge Celso D. Lavia, Presiding Judge, RTC, Branch 71, Pasig City and Sheriff Cresencio Rabello, Jr. This supplemental petition alleges that Gilbert, in an attempt to circumvent the injunctive writ issued by the Eighth Division of the appellate court, filed with the RTC, Branch 71, Pasig City a complaint for replevin on behalf of 3-D Industries, to enable it to take possession of the assets and records of Northern Islands. The complaint was docketed as Civil Case No. 70220. On January 18, 2005, the RTC issued the writ of replevin in favor of 3-D Industries. On April 15, 2005, respondents filed with the Eighth Division a Second Supplemental Petition for Certiorari and Prohibition with Urgent Motion for the Issuance of an Expanded Writ of Preliminary Injunction. Impleaded therein as additional respondents were Ignacio and Ignacio Law Offices, Smartnet, Judge Maria Theresa De Guzman, Presiding Judge, MeTC, Branch 35, Quezon City, Judge Augustus C. Diaz, Presiding Judge, MeTC, Branch 37, Quezon City, Sun Fire Trading Incorporated, Zolt Corporation, Cellprime Distribution Corporation, Goodgold Realty and Development Corporation, John Does and John Doe Corporations. Respondents alleged in the main that the new corporations impleaded are alter egos of Gilbert; and that the filing of the forcible entry cases with the MeTC was intended to thwart the execution of the writ of preliminary injunction dated December 22, 2004 issued by the Court of Appeals (Eighth Division) in CA-G.R. SP No. 87104.1awphil On April 26, 2005, the Eighth Division issued a Resolution admitting respondents new pleading. On August 19, 2005, the Eighth Division (now Seventh Division) rendered its Decision in CA-G.R. SP No. 87104, the dispositive portion of which reads: WHEREFORE, premises considered, the petition is hereby GRANTED and the October 13, 2004 Order and the October 13, 2004 Writ of Preliminary Mandatory Injunction issued by Branch 46 of the Regional Trial Court of Manila are hereby REVERSED and SET ASIDE. The December 17, 2004 Order and Writ of Preliminary Injunction issued by this Court of Appeals are hereby MADE PERMANENT against all respondents herein. SO ORDERED. Meanwhile, in a Decision3 dated September 19, 2005, the RTC, Branch 25, Manila dismissed the complaint filed by Lincoln Continental and the complaint-in-intervention of Gilbert in Civil Case No. 04-109444, thus: WHEREFORE, in view of the foregoing, the Complaint and the Complaint-in-Intervention are hereby DISMISSED. Plaintiff and plaintiff-intervenor are hereby ordered to jointly and severally pay defendants the following: (a) Moral damages in the amount of Php2,000,000.00 each for defendants Simny Guy, Geraldine Guy, Grace Guy-Cheu and Gladys Yao; (b) Moral damages in the amount of Php200,000.00 for defendant Emilia Tabugadir; (c) Exemplary damages in the amount of Php2,000,000.00 each for defendants Simny Guy, Geraldine Guy, Grace Guy-Cheu, and Gladys Yao; (d) Exemplary damages in the amount of Php200,000.00 for defendant Emilia Tabugadir; (e) Attorneys fees in the amount of Php2,000.000.00; and (f) Costs of suit. SO ORDERED. The trial court held that Civil Case No. 04-109444 is a baseless and an unwarranted suit among family members; that based on the evidence, Gilbert was only entrusted to hold the disputed shares of stock in his name for the benefit of the other family members; and that it was only when Gilbert started to dispose of the assets of the familys corporations without their knowledge that respondent sisters caused the registration of the shares in their respective names. Both Lincoln Continental and Gilbert timely appealed the RTC Decision to the Court of Appeals, docketed therein as CA-G.R. CV No. 85937. On September 15, 2005, 3-D Industries, Inc. filed a petition for certiorari, prohibition, and mandamus with this Court assailing the Decision of the Court of Appeals in CA-G.R. SP No. 87104 setting aside the writ of preliminary injunction issued by the RTC, Branch 46. The petition was docketed as G.R. No. 169462 and raffled off to the Third Division of this Court. On October 3, 2005, the Third Division of this Court issued a Resolution4 dismissing the petition of 3-D Industries in G.R. No. 169462. 3-D Industries timely filed its motion for reconsideration but this was denied by this Court in its Resolution5 dated December 14, 2005. Meanwhile, on October 10, 2005, Gilbert, petitioner in G.R. No. 165849 for certiorari, filed with this Court a Supplemental Petition for Certiorari, Prohibition, and Mandamus with Urgent Application for a Writ of Preliminary Mandatory Injunction challenging the Decision of the Court of Appeals (Seventh Division), dated August 19, 2005, in CA-G.R. SP No. 87104. This Decision set aside the
16
Order dated October 13, 2004 of the RTC, Branch 46 granting the writ of preliminary injunction in favor of Lincoln Continental. On November 8, 2005, Ignacio and Ignacio Law Offices and Smartnet filed with this Court their petitions for certiorari, docketed as G.R. Nos. 170185 and 170186, respectively. On February 27, 2006, Lincoln Continental filed with this Court a petition for review on certiorari challenging the Decision of the Court of Appeals (Seventh Division) in CA-G.R. CV No. 85937, docketed as G.R. No. 171066. On March 20, 2006, we ordered the consolidation of G.R. No. 171066 with G.R. Nos. 165849, 170185, and 170186. In the meantime, in a Decision dated November 27, 2006 in CAG.R. CV No. 85937, the Court of Appeals (Special Second Division) affirmed the Decision in Civil Case No. 04-109444 of the RTC (Branch 25) dismissing Lincoln Continentals complaint and Gilberts complaint-in-intervention, thus: WHEREFORE, the appeals are dismissed and the assailed decision AFFIRMED with modifications that plaintiff and plaintiff-intervenor are ordered to pay each of the defendants-appellees Simny Guy, Geraldine Guy, Grace Guy-Cheu and Gladys Yao moral damages of P500,000.00, exemplary damages of P100,000.00 and attorneys fees of P500,000.00. SO ORDERED. Lincoln Continental and Gilbert filed their respective motions for reconsideration, but they were denied in a Resolution promulgated on February 12, 2007. Lincoln Continental then filed with this Court a petition for review on certiorari assailing the Decision of the Court of Appeals (Former Special Second Division) in CA-G.R. CV No. 85937. This petition was docketed as G.R. No. 176650 and raffled off to the Third Division of this Court. In our Resolution dated June 6, 2007, we ordered G.R. No. 176650 consolidated with G.R. Nos. 165849, 170185, 170186, and 171066. THE ISSUES In G.R. Nos. 165849 and 171066, petitioners Gilbert and Lincoln Continental raise the following issues: (1) whether respondents are guilty of forum shopping; and (2) whether they are entitled to the injunctive relief granted in CA-G.R. SP No. 87104. In G.R. Nos. 170185 and 170186, the pivotal issue is whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in ruling that petitioners Ignacio and Ignacio Law Offices and Smartnet are also covered by its Resolution granting the writ of preliminary injunction in favor of respondents. of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. Forum shopping is condemned because it unnecessarily burdens our courts with heavy caseloads, unduly taxes the manpower and financial resources of the judiciary and trifles with and mocks judicial processes, thereby affecting the efficient administration of justice.7 The primary evil sought to be proscribed by the prohibition against forum shopping is, however, the possibility of conflicting decisions being rendered by the different courts and/or administrative agencies upon the same issues.8 Forum shopping may only exist where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.9 Litis pendentia as a ground for dismissing a civil action is that situation wherein another action is pending between the same parties for the same cause of action, such that the second action is unnecessary and vexatious. The elements of litis pendentia are as follows: (a) identity of parties, or at least such as representing the same interest in both actions; (b) identity of rights asserted and the relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other.10 From the foregoing, it is clear that sans litis pendentia or res judicata, there can be no forum shopping. While the first element of litis pendentia identity of parties is present in both CA-G.R. SP No. 85069 and CA-G.R. SP No. 87104, however, the second element, does not exist. The petitioners in CA-G.R. SP No. 85069 prayed that the following Orders be set aside: (1) the Order of inhibition dated June 22, 2004 issued by the presiding judge of the RTC of Manila, Branch 24; and (2) the Order dated July 12, 2004 issued by Branch 46 setting Gilberts application for preliminary injunction for hearing. In their petition in CA-G.R. SP No. 87104, respondents prayed for the annulment of the writ of preliminary injunction issued by the RTC, Branch 46 after the expiration of the TRO issued by the Tenth Division of the Court of Appeals. Evidently, this relief is not identical with the relief sought by respondents in CA-G.R. SP No. 85069. Clearly, the second element of litis pendentia the identity of reliefs sought - is lacking in the two petitions filed by respondents with the appellate court. Thus, we rule that no grave abuse of discretion amounting to lack or excess of jurisdiction may be attributed to the Court of Appeals (Eighth Division) for giving due course to respondents petition in CA-G.R. SP No. 87104.
In G.R. No. 176650, the core issue is whether the Court of Appeals (Special Second Division) erred in affirming the Decision of the RTC, Branch 25, Manila dated September 19, 2005 dismissing the complaint of Lincoln Continental and the complaint-in-intervention of Gilbert in Civil Case No. 04-109444. THE COURTS RULING A. G.R. Nos. 165849 and 171066 On the question of forum shopping, petitioners Gilbert and Lincoln Continental contend that the acts of respondents in filing a petition for certiorari and mandamus in CA-G.R. SP No. 85069 and withdrawing the same and their subsequent filing of a petition for certiorari in CA-G.R. SP No. 87104 constitute forum shopping; that respondents withdrew their petition in CA-G.R. SP No. 85069 after the Tenth Division issued a Resolution dated October 20, 2004 denying their application for a writ of preliminary injunction; that they then filed an identical petition in CA-G.R. SP No. 87104 seeking the same relief alleged in their petition in CA-G.R. SP No. 85069; and that by taking cognizance of the petition in CA-G.R. SP No. 87104, instead of dismissing it outright on the ground of forum shopping, the Court of Appeals committed grave abuse of discretion tantamount to lack or excess of jurisdiction. A party is guilty of forum shopping when he repetitively avails 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.6 It is prohibited by Section 5, Rule 7 of the 1997 Rules of Civil Procedure, as amended, which provides: SECTION 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any other claim involving the same issues in any court, tribunal, or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt
17
On the second issue, Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended provides: SECTION 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is established: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance, or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, agency, or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. For a party to be entitled to an injunctive writ, he must show that there exists a right to be protected and that the acts against which the injunction is directed are violative of this right.11 In granting the respondents application for injunctive relief and making the injunction permanent, the Court of Appeals (Seventh Division) found that they have shown their clear and established right to the disputed 20,160 shares of stock because: (1) they have physical possession of the two stock certificates equivalent to the said number of shares; (2) Lincoln Continental is a mere trustee of the Guy family; and (3) respondents constitute a majority of the board of directors of Northern Islands, and accordingly have management and control of the company at the inception of Civil Case No. 94-109444. The appellate court then ruled that the trial court committed grave abuse of discretion in issuing a writ of preliminary mandatory injunction in favor of Guy. The writ actually reduced the membership of Northern Islands board to just one member - Gilbert Guy. Moreover, he failed to establish by clear and convincing evidence his ownership of the shares of stock in question. The Court of Appeals then held there was an urgent necessity to issue an injunctive writ in order to prevent serious damage to the rights of respondents and Northern Islands. We thus find no reason to depart from the findings of the Court of Appeals. Indeed, we cannot discern any taint of grave abuse of discretion on its part in issuing the assailed writ of preliminary injunction and making the injunction permanent. B. G.R. Nos. 170185 & 170186 Ignacio and Ignacio Law Offices and Smartnet, petitioners, claim that the Court of Appeals never acquired jurisdiction over their respective persons as they were not served with summons, either by the MeTC or by the appellate court in CA-G.R. SP No. 87104. Thus, they submit that the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction when it included them in the coverage of its injunctive writ. Jurisdiction is the power or capacity given by the law to a court or tribunal to entertain, hear, and determine certain controversies.12 Jurisdiction over the subject matter of a case is conferred by law. Section 9 (1) of Batas Pambansa Blg. 129,13 as amended, provides: SEC. 9. Jurisdiction. The Court of Appeals shall exercise: (1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction. Rule 46 of the 1997 Rules of Civil Procedure, as amended, governs all cases originally filed with the Court of Appeals. The following provisions of the Rule state: SEC. 2. To what actions applicable. This Rule shall apply to original actions for certiorari, prohibition, mandamus and quo warranto. Except as otherwise provided, the actions for annulment of judgment shall be governed by Rule 47, for certiorari, prohibition, and mandamus by Rule 65, and for quo warranto by Rule 66. xxx SEC. 4. Jurisdiction over person of respondent, how acquired. The court shall acquire jurisdiction over the person of the respondent by the service on him of its order or resolution indicating its initial action on the petition or by his voluntary submission to such jurisdiction. SEC. 5. Action by the court. The court may dismiss the petition outright with specific reasons for such dismissal or require the respondent to file a comment on the same within ten (10) days from notice. Only pleadings required by the court shall be allowed. All other pleadings and papers may be filed only with leave of court. It is thus clear that in cases covered by Rule 46, the Court of Appeals acquires jurisdiction over the persons of the respondents by the service upon them of its order or resolution indicating its initial action on the petitions or by their voluntary submission to such jurisdiction.14 The reason for this is that, aside from the fact that no summons or other coercive process is served on respondents, their response to the petitions will depend on the initial action of the court thereon. Under Section 5, the court may dismiss the petitions outright, hence, no reaction is expected from respondents and under the policy adopted by Rule 46, they are not deemed to have been brought within the courts jurisdiction until after service on them of the dismissal order or resolution.15
Records show that on April 27, 2005, petitioners in these two forcible entry cases, were served copies of the Resolution of the Court of Appeals (Seventh Division) dated April 26, 2005 in CAG.R. SP No. 87104.16 The Resolution states: Private respondents SMARTNET PHILIPPINES, INC., IGNACIO & IGNACIO LAW OFFICE, SUNFIRE TRADING, INC., ZOLT CORPORATION, CELLPRIME DISTRIBUTION CORPO., GOODGOLD REALTY & DEVELOPMENT CORP., are hereby DIRECTED to file CONSOLIDATED COMMENT on the original Petition for Certiorari, the First Supplemental Petition for Certiorari, and the Second Supplemental Petition for Certiorari (not a Motion to Dismiss) within ten (10) days from receipt of a copy of the original, first and second Petitions for Certiorari.17 Pursuant to Rule 46, the Court of Appeals validly acquired jurisdiction over the persons of Ignacio and Ignacio Law Offices and Smartnet upon being served with the above Resolution. But neither of the parties bothered to file the required comment. Their allegation that they have been deprived of due process is definitely without merit. We have consistently held that when a party was afforded an opportunity to participate in the proceedings but failed to do so, he cannot complain of deprivation of due process for by such failure, he is deemed to have waived or forfeited his right to be heard without violating the constitutional guarantee.18 On the question of whether the Court of Appeals could amend its Resolution directing the issuance of a writ of preliminary injunction so as to include petitioners, suffice to state that having acquired jurisdiction over their persons, the appellate court could do so pursuant to Section 5 (g), Rule 135 of the Revised Rules of Court, thus: SEC. 5. Inherent powers of courts. Every court shall have power: xxx (g) To amend and control its process and orders so as to make them conformable to law and justice. In Villanueva v. CFI of Oriental Mindoro19 and Eternal Gardens Memorial Parks Corp. v. Intermediate Appellate Court,20 we held that under this Rule, a court has inherent power to amend its judgment so as to make it conformable to the law applicable, provided that said judgment has not yet acquired finality, as in these cases. C. G.R. No. 176650 The fundamental issue is who owns the disputed shares of stock in Northern Islands.
18
We remind petitioner Lincoln Continental that what it filed with this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended. It is a rule in this jurisdiction that in petitions for review under Rule 45, only questions or errors of law may be raised.21 There is a question of law when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts, or when the issue does not call for an examination of the probative value of the evidence presented. There is a question of fact when the doubt arises as to the truth or falsehood of facts or when there is a need to calibrate the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.22 Obviously, the issue raised by the instant petition for review on certiorari, involves a factual matter, hence, is outside the domain of this Court. However, in the interest of justice and in order to settle this controversy once and for all, a ruling from this Court is imperative. One thing is clear. It was established before the trial court, affirmed by the Court of Appeals, that Lincoln Continental held the disputed shares of stock of Northern Islands merely in trust for the Guy sisters. In fact, the evidence proffered by Lincoln Continental itself supports this conclusion. It bears emphasis that this factual finding by the trial court was affirmed by the Court of Appeals, being supported by evidence, and is, therefore, final and conclusive upon this Court. Article 1440 of the Civil Code provides that: ART. 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary. In the early case of Gayondato v. Treasurer of the Philippine Islands,23 this Court defines trust, in its technical sense, as "a right of property, real or personal, held by one party for the benefit of another." Differently stated, a trust is "a fiduciary relationship with respect to property, subjecting the person holding the same to the obligation of dealing with the property for the benefit of another person."24 Both Lincoln Continental and Gilbert claim that the latter holds legal title to the shares in question. But record shows that there is no evidence to support their claim. Rather, the evidence on record clearly indicates that the stock certificates representing the contested shares are in respondents possession. Significantly, there is no proof to support his allegation that the transfer of the shares of stock to respondent sisters is fraudulent. As aptly held by the Court of Appeals, fraud is never presumed but must be established by clear and convincing evidence.25 Gilbert failed to discharge this burden. We, agree with the Court of Appeals that respondent sisters own the shares of stocks, Gilbert being their mere trustee. Verily, we find no reversible error in the challenged Decision of the Court of Appeals (Special Second Division) in CA-G.R. CV No. 85937. WHEREFORE, we DISMISS the petitions in G.R. Nos. 165849, 170185, 170186 and 176650; and DENY the petitions in G.R. Nos. 171066 and 176650. The Resolutions of the Court of Appeals (Eighth Division), dated October 28, 2004 and November 4, 2004, as well as the Decision dated October 10, 2005 of the Court of Appeals (Seventh Division) in CA-G.R. SP No. 87104 are AFFIRMED. We likewise AFFIRM IN TOTO the Decision of the Court of Appeals (Special Second Division), dated November 27, 2006 in CA-G.R. CV No. 85937. Costs against petitioners. SO ORDERED.
Republic of the Philippines SUPREME COURT Manila
19
University Hospital v. Surla.3 again reversed itself and respondent's counterclaim. On 4 June 1999, the trial court recalled its Order dismissing independent resolution except by the court where the main case pends. Prescinding from the foregoing, the proviso in the second paragraph of Section 5, Rule 8 of the 1997 Rules of Civil Procedure, i.e., that the violation of the anti-forum shopping rule "shall not be curable by mere amendment xxx but shall be cause for the dismissal of the case without prejudice," being predicated on the applicability of the need for a certification against forumshopping, obviously does not include a claim which cannot be independently set up. The Court reiterated this ruling in Ponciano v. Judge Parentela, Jr.4 Administrative Circular No. 04-94 does not apply to compulsory counterclaims. The circular applies to initiatory and similar pleadings. A compulsory counterclaim set up in the answer is not an "initiatory" or similar pleading. The initiatory pleading is the plaintiff's complaint. A respondent has no choice but to raise a compulsory counterclaim the moment the plaintiff files the complaint. Otherwise, respondent waives the compulsory counterclaim.5 In short, the compulsory counterclaim is a reaction or response, mandatory upon pain of waiver, to an initiatory pleading which is the complaint. Petitioner argues, however, that the Court's rulings in Santo Tomas and Ponciano are "contrary to the mandate of Administrative Circular No. 04-94" and other procedural laws.6 Petitioner is mistaken. The Constitution expressly bestows on this Court the power to promulgate rules concerning the pleading, practice and procedure in all courts.7 Procedural matters are within the sole jurisdiction of this Court to prescribe. Administrative Circular No. 04-94 is an issuance of this Court. It covers a matter of procedure. Administrative Circular No. 04-94 is not an enactment of the Legislature. This Court has the exclusive jurisdiction to interpret, amend or revise the rules it promulgates, as long as the rules do not diminish, increase, or modify substantive rights. This is precisely the purpose of Santo Tomas as far as Administrative Circular No. 04-94 is concerned. Petitioner's counsel fails or simply refuses to accept the distinction between a permissive counterclaim and a compulsory counterclaim. This distinction was the basis for the ruling in Santo Tomas and Ponciano. The sole issue for resolution in the present case is whether respondent's counterclaim is compulsory or permissive. If it is a permissive counterclaim, the lack of a certificate of non-forum shopping is fatal. If it is a compulsory counterclaim, the lack of a certificate of non-forum shopping is immaterial. A compulsory counterclaim is any claim for money or other relief, which a defending party may have against an opposing party, which at the time of suit arises out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of plaintiff's complaint.8 It is compulsory in the sense that
FIRST DIVISION G.R. No. 139018 April 11, 2005
ESTHERLITA CRUZ-AGANA, Petitioner, vs. HON. JUDGE AURORA SANTIAGO-LAGMAN (In her capacity as Presiding Judge of Regional Trial Court, Branch 77, Malolos, Bulacan) and B. SERRANO ENTERPRISES, INC., Respondents. DECISION CARPIO, J.: The Case This petition for certiorari1 seeks to reverse the Order of the Regional Trial Court, Branch 77, Malolos, Bulacan ("trial court"), dated 4 June 1999, recalling its previous Order dated 25 May 1999 dismissing B. Serrano Enterprises, Inc.'s ("respondent") counterclaim upon a motion to dismiss filed by petitioner Estherlita Cruz-Agana ("petitioner"). Antecedent Facts On 18 March 1996, petitioner filed a Complaint for annulment of title with prayer for preliminary mandatory injunction against respondent. Petitioner claims that as the sole heir of one Teodorico Cruz, she is the sole owner of a lot covered by Transfer Certificate of Title No. T-3907. Petitioner further claims that the lot was fraudulently sold to Eugenio Lopez, Jr. who later on transferred the lot to respondent. The case was raffled to the Regional Trial Court, Branch 77, Malolos, Bulacan presided by Judge Aurora Santiago-Lagman and docketed as Civil Case No. 210-M-96. Respondent seasonably filed its Answer with compulsory counterclaim. Petitioner moved to dismiss respondent's counterclaim for lack of a certificate of non-forum shopping. In an Order dated 11 March 1999, the trial court denied petitioner's motion to dismiss respondent's counterclaim. The trial court reasoned that respondent's counterclaim is compulsory and therefore excluded from the coverage of Section 5, Rule 7 of the Rules of Court. Petitioner moved that the trial court reconsider its Order invoking the mandatory nature of a certificate of non-forum shopping under Supreme Court Administrative Circular No. 04-94.2 On 25 May 1999, the trial court reversed its 11 March 1999 Order and dismissed respondent's counterclaim for lack of a certificate of non-forum shopping. Respondent seasonably filed a motion for reconsideration arguing that Administrative Circular No. 04-94 does not apply to compulsory counterclaims following the ruling in Santo Tomas
Petitioner now comes before this Court through Rule 65 of the 1997 Rules of Civil Procedure. The Trial Court's Ruling The trial court found that respondent's counterclaim is compulsory in nature. The trial court ruled that the filing of a compulsory counterclaim does not require a certificate of nonforum shopping. On the effect of Santo Tomas on Administrative Circular No. 04-94, the trial court explained: It is settled rule that it is one of the inherent powers of the court to amend and control its processes and orders so as to make them conformable to law and justice. This power includes the right to reverse itself, specially when in its honest opinion, it has committed an error or mistake in judgment, and that to adhere to its decision will cause injustice to a party litigant. The Issue Petitioner raises the following issue: WHETHER THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN REFUSING TO DISMISS RESPONDENT'S COUNTERCLAIM. The Ruling of the Court The petition lacks merit. The issue presented is not novel. This Court has squarely settled this issue in Santo Tomas University Hospital v. Surla.3 Writing for the Court, Justice Jose C. Vitug began his ponencia thus: Can a compulsory counterclaim pleaded in an Answer be dismissed on the ground of a failure to accompany it with a certificate of non-forum shopping? This question is the core issue presented for resolution in the instant petition. Santo Tomas clarified the scope of Administrative Circular No. 0494 with respect to counterclaims. The Court pointed out that this circular is intended primarily to cover "an initiatory pleading or an incipient application of a party asserting a claim for relief." The distinction between a compulsory and a permissive counterclaim is vital in the application of the circular. The Court explained: It should not be too difficult, the foregoing rationale of the circular aptly taken, to sustain the view that the circular in question has not, in fact, been contemplated to include a kind of claim which, by its very nature as being auxiliary to the proceedings in the suit and as deriving its substantive and jurisdictional support therefrom, can only be appropriately pleaded in the answer and not remain outstanding for
20
it is within the jurisdiction of the court, does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and will be barred in the future if not set up in the answer to the complaint in the same case. Any other counterclaim is permissive. Respondent's counterclaim as set up in its answer states: 3. That because of the unwarranted, baseless, and unjustified acts of the plaintiff, herein defendant has suffered and continue to suffer actual damages in the sum of at least P400,000,000.00 which the law, equity, and justice require that to be paid by the plaintiff and further to reimburse the attorney's fees of P2,000,000.00;9 It is clear that the counterclaim set up by respondent arises from the filing of plaintiff's complaint. The counterclaim is so intertwined with the main case that it is incapable of proceeding independently. The counterclaim will require a re-litigation of the same evidence if the counterclaim is allowed to proceed in a separate action. Even petitioner recognizes that respondent's counterclaim is compulsory.10 A compulsory counterclaim does not require a certificate of non-forum shopping because a compulsory counterclaim is not an initiatory pleading. WHEREFORE, the instant petition is DENIED for lack of merit. We AFFIRM the Order of the Regional Trial Court, Branch 77, Malolos Bulacan, dated 4 June 1999 recalling the Order dated 25 May 1999 which dismissed the compulsory counterclaim of respondent B. Serrano Enterprises, Inc. SO ORDERED.
Republic of the Philippines SUPREME COURT Manila
21
corporation may be permitted to transact business in the Philippines, but adds that such license may be obtained from the Director of Commerce upon order of the Secretary of Commerce and Industry. Plaintiffs opposed the motion to dismiss; and the trial court, in an order dated June 27, 1960, found the complaint deficient in that it failed to state the plaintiffs were duly licensed to transact business in the Philippines, but gave them an opportunity to amend said complaint within a period of ten days. Plaintiffs moved to reconsider and, after the motion was denied, filed a manifestation to the effect that they could not comply with the order to amend but would wait for the dismissal of the complaint so as to be able to elevate the matter to this Court on appeal. On September 6, 1960, the order of dismissal was issued. The trial court would have plaintiffs amend the complaint by including therein an allegation that as foreign corporations they were duly licensed to engage in business in the Philippines. The implication of the court's ruling is that without such license a foreign corporation may not sue in our courts in view of section 69 of the Corporation Law. Appellants contend that this is an erroneous interpretation of the statute; that a license is necessary before a foreign corporation may transact, that is, engage in, business in the Philippines, and if so engaged before, it may maintain a suit in our courts; but that if a foreign corporation is not doing business here it is not barred from seeking redress in our courts in proper cases, as when it sues on an isolated transaction, even if it has not obtained a license pursuant to Section 69. Appellants' contention is correct as far as it goes. It finds support in the decision written by Mr. Justice Malcolm in Marshall-Wells Co. vs. Elser & Co., 46 Phil. 71 (September 8, 1924), where this Court said after analyzing Section 69 of the Corporation Law: "The Law simply means that no foreign corporation shall be permitted to transact business in the Philippines, ... unless it shall have the license required by law, and, until it complies with this law, shall not be permitted to maintain any suit in the local courts." "The object of the statute," this Court explained in that case, "was to object of the statute was not to prevent the foreign corporation from performing single acts, but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts. The implication of the law is that it was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, from securing redress in the Philippine Courts, and thus, in effect, to permit persons to avoid their contracts made with such foreign corporations. The effect of the statute preventing foreign corporations from doing business and from bringing actions in the local courts, except in compliance with elaborate requirements, must not be unduly extended or improperly applied. It should not be construed to extend beyond the plain meaning of its terms, considered in connection with its object, and in connection with the spirit of the entire law." But merely to say that a foreign corporation not doing business in the Philippines does not need a license in order to sue in our courts does not completely resolve the issue in the present case. The proposition, as stated, refers to the right to sue; the question here refers to pleading and procedure. It should be noted that insofar as the allegations in the complaint have a bearing on appellants' capacity to sue, all that is averred is that they are both foreign corporations existing under the laws of the United States. This averment conjures two alternative possibilities: either they are engaged in business in the Philippines or they are not so engaged. If the first, they must have been duly licensed in order to maintain this suit; if the second, if the transaction sued upon is singular and isolated, no such license is required. In either case, the qualifying circumstance is an essential part of the element of plaintiffs' capacity to sue and must be affirmatively pleaded.1wph1.t To be sure, under the Rules of Court (Section 11, Rule 15) in force prior to the promulgation of the Revised Rules on January 1, 1964, it was not necessary to aver the capacity of a party to sue except to the extent required to show jurisdiction of the court. In our opinion, however, such rule does not apply in all situations and under all circumstances. The theory behind a similar rule in the United States is "that capacity ... of a party for purpose of suit is not in dispute in the great bulk of cases, and that pleading and proof can be simplified by a rule that an averment of such matter is not necessary, except to show jurisdiction."1 But where as in the present case, the law denies to a foreign corporation the right to maintain suit unless it has previously complied with a certain requirement, then such compliance, or the fact that the suing corporation is exempt therefrom, becomes a necessary averment in the complaint. These are matters peculiarly within the knowledge of appellants alone, and it would be unfair to impose upon appellee the burden of asserting and proving the contrary. It is enough that foreign corporations are allowed by law to seek redress in our courts under certain conditions: the interpretation of the law should not go so far as to include, in effect, an inference that those conditions have been met from the mere fact that the party suing is a foreign corporation. It was indeed in the light of these and other consideration that this Court has seen fit to amend the former rule by requiring in the Revised Rules (Section 4, Rule 8) that "facts showing the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, must be averred." The orders appealed from are affirmed, with costs against plaintiffs-appellants. Republic of the Philippines SUPREME COURT
EN BANC G.R. No. L-18961 August 31, 1966
ATLANTIC MUTUAL INSURANCE COMPANY and CONTINENTAL INSURANCE COMPANY, plaintiffs and appellants, vs. CEBU STEVEDORING CO., INC., defendant and appellee. William H. Quasha and Associates for plaintiffs and appellants. Deen Law Offices for defendant and appellee. MAKALINTAL, J.: This is an appeal from three orders of the Court of First Instance of Cebu, the last one dismissing appellants' complaint. These appellants Atlantic Mutual Insurance Company and Continental Insurance Company are both foreign corporations existing under the laws of the United States. They sued the Cebu Stevedoring Co., Inc., a domestic corporation, for recovery of a sum of money on the following allegations: that defendant, a common carrier, undertook to carry a shipment of copra for deliver to Procter & Gamble Company, at Cebu City; that upon discharge, a portion of the copra was found damaged; that since the copra had been previously insured with plaintiffs they paid the shipper and/or consignee, upon proper claim and assessment of the damage, the sum of P15,980.30; and that as subrogee to the shipper's and/or consignee's rights, plaintiffs demanded, without success, settlement from defendant by reason of its failure to comply with its obligation, as carrier, to deliver the copra in good order. Defendant moved to dismiss on two grounds: (a) that plaintiffs had "no legal personality to appear before Philippine courts and with no capacity to sue;" and (b) that the complaint did not state a cause of action. Both grounds were based upon failure of the complaint to allege compliance with section 69 of the Corporation Law, which states: SEC. 69. No foreign corporation or corporation formed, organized, or existing under any laws other than those of the Philippines shall be permitted to transact business in the Philippines or maintain by itself or assigned any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceeding. Any officer, director or agent of the corporation or any person transacting business for any foreign corporation not having the license prescribed shall be punished by imprisonment for not less than six months nor more than two years or by a fine of not less than two hundred pesos nor more than one thousand pesos, or by both such imprisonment and fine, in the discretion of the Court. Section 68 of the Corporation Law is almost identical with the first part of Section 69 which requires a license before a foreign
22
Manila EN BANC G.R. No. L-8171 December 20, 1915 Manila to Hongkong and return and two trips from Baguio to Manila and return. The plaintiff also claims P878 fees and expenses of receiver. This claim, however, is not included in the complaint in this action but is presented along with the account of the receiver; and the court is asked to allow said sum in said proceeding, and to order the defendant to pay said sum at the same time that judgment is entered in his favor in the action. On this appeal the only objections made to the judgment of the trial court relate to the disallowance of the fourth cause of action and the fees and expenses of the receiver, and to a refusal to allow another small item to which reference will later be made. It is the contention of the appellant that the trial court erred in dismissing the fourth cause of action, and he bases that contention on the claim that all of the allegations of that cause of action are either not denied or are expressly admitted by the answer; and that while there was, as matter of law, no question before the court except the value of the services rendered and the amount of the expenses incurred in the rendition thereof, the court, nevertheless, took under advisement and considered the question whether the company was liable for such services and the expenses incurred in their rendition and found, as a fact, that the services had not been rendered for and on behalf of the company and, accordingly, that the company was not liable therefor or for the expenses incurred therein. The appellant alleges that this finding is error as it is contrary either to the express admissions of defendant's answer or to the undenied allegations of the complaint. We agree with the appellant in this contention.itc-a1f As we have stated, the fourth cause of action is for services rendered on behalf of the defendant company at its instance and request, and money necessarily expended during the rendition of those services, consisting of a trip from Manila to Hongkong and return and two trips from Baguio to Manila and return, the value of which services, together with expenses included, according to the allegations contained in the fourth cause of action, was P813.20. This cause of action also embraces money expended for cablegrams, P34.96, and for rice furnished to the defendant of the value of P143.20. Answering this cause of action the defendant says: "Defendant admits that plaintiff has sold and delivered to defendant rice of the value of one hundred and forty-three pesos and twenty centavos (P143.20), and admits that there is due plaintiff from defendant a sum of money for reimbursement of expenses incurred by plaintiff for defendant, but denies that such expenses amount to the sum set out in paragraph 3 of plaintiff's fourth cause of action or to any sum in excess of two hundred pesos (P200). And defendant further alleges that it is ready and willing to pay plaintiff the amount justly due plaintiff under his fourth cause of action, and has heretofore made tender to plaintiff of such amount, which plaintiff has refused.
L.O. HIBBERD, plaintiff-appellant, vs. THE HEADWATERS MINING CO., defendant-appellee. McDonough and Blanco for appellant. No appearance for appellee. MORELAND, J.: This is an appeal by plaintiff from a judgment of the Court of First Instance of Benguet in his favor in an action to recover money, it being claimed on the appeal that the sum allowed was not in accordance with the pleadings and the evidence. The defendant company is a mining corporation organized and incorporated for the working of various mineral claims in the Province of Benguet. During the operation of the mines the defendant company came to need additional funds and succeeded in borrowing from the plaintiff P40,000 for which it gave a mortgage on its mining properties and plant. The corporation not having paid the mortgage when it was due, this action was commenced. The complaint contains four causes of action. The first is for the foreclosure of the mortgage referred to. In that cause of action plaintiff asked for the appointment of a receiver, alleging that the corporation was insolvent; that the machinery and buildings and all property and effects connected therewith, having been abandoned by the defendant, were in danger of deteriorating and suffering material damage; that they were not insured; and that the property would not be sufficient on sale to pay the mortgage debt. On these allegations the Court of First Instance of Benguet appointed the plaintiff receiver of the property, and he thereupon duly qualified and took possession thereof. The second cause of action is for the recovery of certain sums of money which the plaintiff paid to the laborers of the defendant corporation for services rendered to that corporation during the operation of the mines and for which they had not been paid prior to the appointment of the receiver. The third cause of action is based on labor performed, materials furnished and money expended necessary to comply with the provisions of the mining law requiring a certain amount of work to be performed on each claim annually. The fourth cause of action is for services rendered and money expended on behalf of the defendant corporation on a trip from
Defendant has heretofore tendered to plaintiff, and hereby again tenders to plaintiff, the sum of one thousand pesos (P1,000), Philippine currency, in payment of interest due plaintiff under his second and third causes of action, and principal and interest due plaintiff under his fourth cause of action, of costs, expenses and claims of any kind that plaintiff may have against defendant within the matters set up in plaintiff's complaint herein or arising therefrom; the purpose of this tender being not to acknowledge liability to plaintiff beyond the admissions of this answer, but to settle the case at the present time, or, if this tender be refused, to limit plaintiff's claim for interest and costs in the event that he shall not recover judgment in a greater amount than that thereby tendered. We take the answer to the fourth cause of action to be an admission of, coupled with a failure to deny, the material facts alleged in that cause of action except the amount of the expenses incurred during the rendition of those services. The trial court, however, does not seem to have taken that view. It says: The first disputed item is one of P618 for expenses and compensation upon a trip made by the plaintiff to Hongkong. This, of course, can only be chargeable to the defendant in case it was actually authorized by its proper officer, or subsequently ratified. Plaintiff recognizes this by alleging (par. 3) that it was undertaken "at the instance of the defendant corporation." But in his testimony plaintiff does not claim that he was asked to go to Hongkong by any of the company's officers. In fact, his counsel relies chiefly upon a statement in a letter (Exhibit B) written subsequently by defendant's president, in which he states to plaintiff: "We have done one good thing, which is to follow your advice, given to me when you were here last." We are unable to consider this or to surrounding circumstances a sufficient basis for a finding that defendant either authorized or ratified the expenses of this trip on plaintiff's part so as to make defendant chargeable therewith. The next claim is for P242.60 for one of plaintiff's trips to Manila. Practically the whole of the testimony on this point by plaintiff is as follows: Q. These two trips that you made to Manila; the first was on the 12th of December, according to your complaint. You say that was at the request of Dr. Noble? A. Cablegrams from Dr. Noble, president of the company. Q. Have you that cable? A. Yes, sir.
Q. Produce it, please. A. (Counsel produces a document.) Q. Just read the translation of that cablegram into the record. A. "Cole leaves today. Loongsang. Can you meet Manila with a view to make best possible arrangement continuance. Noble."
23
Q. What does that phrase `best possible arrangement continuance' refer to? A. Continue operation of the Headwaters mine. Q. Did you make any reply to that cablegram? A. Yes, sir; I made reply to this cable. Q. Have you a copy of it? A. I think I have; a copy where I would not make any arrangement with Mr. Cole. Q. Did you not cable or telegraph either Mr. Cole or Dr. Noble that you would go to Manila if your expenses were paid? A. No, sir; I did not. Q. What was your interest in continuing operation of the Headwaters mine? A. The same interest that anyone else that is asked to take a man's case, if he pays for it. That is my interest; when a man asks me to do anything I do it to get my pay for it. Q. Then your purpose was to discuss taking over the management of the mine? A. Yes, sir. Q. Why did that trip to Manila require seven days? A. There was a number of ... . This stated to make arrangements, and we were making arrangements, and I could never agree with his, I would agree to start the mine, but they at that time, insisted that should work with Mr. Cole as technical manager, I believe was the point, and I didn't see where I could furnish any money, as they wanted some money furnished, too, and my mortgage released, that we couldn't come to an agreement. That was why it took so much time. There were a number of telegrams exchanged. With reference to the trips to Manila the trial court states: "For the same reasons mentioned in connection with the preceding claims, we do not think we would be justified in finding from this evidence that the defendant either authorized or ratified this expense. The trip seems to have been made partly at least in plaintiff's own interest, and with a view to discuss taking over the management of the mine. At any rate, there is nothing to indicate that any of defendant's officers understood that the company was to be chargeable wit plaintiff's expenses, let alone the value of his time while engaged in such negotiations. The case would seem to be analogous to one where a business man cables another to meet him at a certain place in order to discuss matters of mutual interest. The one who requests the interview may be more interested than the other, but it is not usual and, we think, not expected that either will defray the other's expenses without a definite agreement to that effect. It must not be forgotten here that plaintiff was not only a heavy creditor, but a stockholder in the corporation, and had a very direct interest in the continuance of its operation." In dealing with the question in this manner the trial court evidently overlooked the admission in defendant's answer and its failure to deny certain allegations of the complaint to which we have already adverted. It is, of course, elementary that it is not incumbent on the plaintiff to prove allegations in his complaint which are admitted by the answer; nor is he obliged to prove allegations which are not denied. The last paragraph of section 94 of the Code of Civil Procedure provides: "A material allegation of the complaint which is neither generally nor specifically denied in the answer shall be deemed to have been admitted." (Alemany vs. Sweeney, 3 Phil. Rep., 114, 115; Cabanas vs. Director of Lands, 10 Phil. Rep., 393; Mendiola vs. Pacalda, 10 Phil. Rep., 705, 707; Lopez vs. Enriquez, 16 Phil. Rep., 336, 338.) While the express admission in defendant's answer refers only to "reimbursement of expenses incurred by plaintiff for defendant," the answer nowhere denies that the services were rendered for and on behalf of the defendant at its request and it nowhere denies the value of such services to be as alleged. The fourth cause of action states that the expenses of the trip to Hongkong and return were P168, while the value of the services rendered therein was P450. The expense of the two trips from Baguio to Manila is set out in that cause of action at P65.20, while the value of the services rendered on these two occasions is alleged to be P420. On the trial plaintiff proved that the expenses incurred on the trips mentioned in the fourth cause of action amounted to P233.20, and, that evidence not having been controverted and the amount not unreasonable, he is entitled to recover that amount. For the same reason he should recover the value of the services rendered on the trips to Hongkong and Manila; and the undisputed evidence shows that it was P870. For like reason the sum of P34.96 must be allowed for cablegrams sent by plaintiff for and on behalf of the defendant corporation; and he must recover the sum of P143.20 for rice furnished. These latter items, as we have seen, are expressly admitted in the answer to the fourth cause of action.1awphil.net With the decision of the trial court on the question of the receiver's right to fees and expenses we agree in part, but we differ with it as to the ground on which the decision should be rested. The rejection of the claim of the receiver is placed by the trial court on the ground that, under the evidence adduced by plaintiff on the trial, the appointment of a receiver was unnecessary. Again it would appear that the trial court overlooked the pleadings, failing to take into consideration the fact that the answer of the defendant does not deny the allegations of the complaint which show the propriety and legality of the appointment of a receiver under the code. By virtue of section 174 of the Code of Civil Procedure a receiver may be appointed "where it is made to appear by the complaint or answer, and by such other proof as the judge may require, that the party making the application for the appointment of receiver has an interest in the property or fund which is the subject of the action and it is shown that the property or fund is in danger of being lost, removed or materially injured unless a receiver shall be appointed to guard and preserve it." A receiver may be appointed under that section in an action to foreclose a mortgage "where it appears that the property is in danger of being wasted or materially injured." The complaint alleges that the defendant was insolvent at the time the action was commenced; that the property mortgaged, consisting of machinery, buildings and accessories, was in danger of deterioration, and of suffering material damage, that it had been abandoned by the defendant, that it was uninsured, and that the property would probably be insufficient on sale to pay the mortgage debt. The defendant in answering these allegations simply denies that the property "was exposed to the danger of material deterioration, denies that said property or any part thereof was abandoned by defendant, and denies that there was any probability that the property covered by the mortgaged would be insufficient in value to cover plaintiff's claim as set out in his first cause of action." Here, as will be seen, defendant has not denied that the plaintiff has an "interest in the property ... which is the subject of the action" or that the property was likely to be "materially injured." Defendant simply denies that the property is liable to deterioration, whereas the plaintiff alleges that the property is not only liable to deterioration but that it is likely to be materially injured. From the foregoing we deem it clear that, considered in its best light, the answer fails to deny some of the material allegations of the complaint which, is a foreclosure action, or in any other action where plaintiff has an interest in the property which is the object of the action, furnished sufficient ground for the appointment of a receiver. Moreover, we are of the opinion that, from the evidence, we cannot say, as matter of fact and law, that the court, in making the appointment, acted beyond or in excess of its power and authority. In spite of the fact, however, that, under the pleadings and the evidence in the case, we cannot declare the appointment of a receiver improper, we are of the opinion that the plaintiff should not have been appointed. It is important to observe that courts of equity are exceedingly jealous of appointing any person to a receivership whose duty it would otherwise be to watch the proceedings of the receiver or to call him to account for his management of the trust; and, unless under special circumstances, as in partnership cases in some instances, a party to the cause will not ordinarily be appointed without the consent of the other party (High on Receivers, section 70); and it has been held that it is improper to appoint as receiver one of the plaintiffs at whose instance the relief is sought. While the plaintiff to the action is not absolutely disqualified for the position of receiver, nevertheless, it is not often that he should be appointed; and, while an appellate court would hesitate before interfering with the discretion of the trial court in the appointment of a party as receiver, it is not improper, we think, to state that such is not the custom or the practice and should not be encouraged. It has been stated "that while a court may refuse to appoint a party to a cause, unless in cases of necessity, the weight of authority establishes the rule that the mere fact that one is interested in or a party to the suit does not disqualify him, in the absence of statutory disqualification, although in such case his appointment is without compensation ..." (34 Cyc., 142). This rule, however, has its exceptions, some of the authorities stating that, where the appointment is made without any reference having been made to compensation, the granting of
24
compensation rests in the sound discretion of the court trying the action in which the receiver is appointed, and his judgment on the matter will not be interfered with as a general rule. We are, therefore, of the opinion that the receiver should not be allowed compensation, but that he should be permitted to recover the expenses actually and necessarily incurred in caring for the property. These, it is undisputed, amount to P218. The judgment is reversed and set aside; and judgment is hereby rendered for the plaintiff, L.O. Hibberd, and against the defendant, The Headwaters Mining Co., for the sum of one thousand three hundred and five pesos and ninety-five centavos to (P1,305.95). No costs in this instance. As to the expenses allowed to receiver herein, the cause is returned for further proceedings in accordance with this opinion and the law and practice relating to receiverships. So ordered.
25

CivPro Case Set 3

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

CivPro Case Set 3

Hochgeladen von

Copyright:

Verfügbare Formate

Civil Procedure Case Set 3 New Era University College of Law PERRAL

Republic of the Philippines SUPREME COURT

Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION G.R. No. 139018 April 11, 2005

Republic of the Philippines SUPREME COURT Manila

EN BANC G.R. No. L-18961 August 31, 1966

Das könnte Ihnen auch gefallen