Beruflich Dokumente
Kultur Dokumente
FIRST DIVISION
the loans and demanded from the
latter payment in the total amount of
US$150,000 plus unpaid interests
[G.R. No. 161135. April 8, 2005] in the total amount of US$13,500. [2]
$50,000 on August 9, 1999, March 14, 2003, the Court of Appeals denied
2000 and July 14, 2000. petitioners appeal and
affirmed in toto the decision of the
(2) When the instant case was filed on trial court, holding as follows:
February 2, 1999, none of the
promissory notes was due and In the case at bench, there is no
demandable. As of this date however, incompatibility because the changes
the first and the second promissory referred to by appellant Swagman
notes have already matured. Hence, consist only in the manner of payment.
payment is already due. ...
In the case at bench, while it is true that III. MAY THE RESPONDENT
appellant Swagman raised in its COURT OF APPEALS VALIDLY
Answer the issue of prematurity in the AFFIRM A DECISION OF THE
filing of the complaint, appellant LOWER COURT WHICH IS
Swagman nonetheless failed to object INVALID DUE TO LACK OF
to appellee Christians presentation of CAUSE OF ACTION?
evidence to the effect that the
IV. WHERE THERE IS A Cause of action, as defined in
VALID NOVATION, MAY Section 2, Rule 2 of the 1997 Rules
THE ORIGINAL TERMS OF of Civil Procedure, is the act or
CONTRACT WHICH HAS BEEN omission by which a party violates
NOVATED STILL PREVAIL? [10]
the right of another. Its essential
elements are as follows:
The petitioner harps on the 1. A right in favor of the plaintiff by
absence of a cause of action at the whatever means and under
time the private respondents whatever law it arises or is
complaint was filed with the trial created;
court. In connection with this, the 2. An obligation on the part of the
petitioner raises the issue of named defendant to respect or
novation by arguing that its not to violate such right; and
obligations under the three 3. Act or omission on the part of
promissory notes were novated by such defendant in violation of
the renegotiation that happened in the right of the plaintiff or
constituting a breach of the
December 1997 wherein the private obligation of the defendant to
respondent agreed to waive the the plaintiff for which the latter
interest in each of the three may maintain an action for
promissory notes and to accept recovery of damages or other
appropriate relief.[11]
US$750 per month as installment
payment for the principal loans in It is, thus, only upon the
the total amount of US$150,000. occurrence of the last element that
Lastly, the petitioner questions the a cause of action arises, giving the
act of the Court of Appeals in plaintiff the right to maintain an
considering Hegerty and Infante as action in court for recovery of
appellants when they no longer damages or other appropriate relief.
appealed because the trial court
It is undisputed that the three
had already absolved them of the
promissory notes were for the
liability of the petitioner corporation.
amount of P50,000 each and
On the other hand, the private uniformly provided for (1) a term of
respondent asserts that this petition three years; (2) an interest of 15 %
is a mere ploy to continue delaying per annum, payable quarterly; and
the payment of a just obligation. (3) the repayment of the principal
Anent the fact that Hegerty and loans after three years from their
Atty. Infante were considered by the respective dates. However, both the
Court of Appeals as appellants, the Court of Appeals and the trial court
private respondent finds it found that a renegotiation of the
immaterial because they are not three promissory notes indeed
affected by the assailed decision happened in December 1997
anyway. between the private respondent and
the petitioner resulting in the trial court should have therefore
reduction not waiver of the interest dismissed his complaint.
from 15% to 6% per annum, which
Despite its finding that the
from then on was payable monthly,
petitioner corporation did not violate
instead of quarterly. The term of the
the modified terms of the three
principal loans remained
promissory notes and that the
unchanged in that they were still
payment of the principal loans were
due three years from the respective
not yet due when the complaint was
dates of the promissory notes.
filed, the trial court did not dismiss
Thus, at the time the complaint was
the complaint, citing Section 5, Rule
filed with the trial court on 2
10 of the 1997 Rules of Civil
February 1999, none of the three
Procedure, which reads:
promissory notes was due yet;
although, two of the promissory Section 5. Amendment to conform to or
notes with the due dates of 7 authorize presentation of evidence.
August 1999 and 14 March 2000 When issues not raised by the pleadings
matured during the pendency of the are tried with the express or implied
case with the trial court. Both courts consent of the parties, they shall be
also found that the petitioner had treated in all respects as if they had
been religiously paying the private been raised in the pleadings. Such
respondent US$750 per month from amendment of the pleadings as may be
January 1998 and even during the necessary to cause them to conform to
pendency of the case before the the evidence and to raise these issues
trial court and that the private may be made upon motion of any party
respondent had accepted all these at any time, even after judgment; but
monthly payments. failure to amend does not affect the
With these findings of facts, it result of the trial of these issues. If
has become glaringly obvious that evidence is objected to at the trial on
when the complaint for a sum of the ground that it is not within the
money and damages was filed with issues made by the pleadings, the court
the trial court on 2 February 1999, may allow the pleadings to be amended
no cause of action has as yet and shall do so with liberality if the
existed because the petitioner had presentation of the merits of the action
not committed any act in violation of and the ends of substantial justice will
the terms of the three promissory be subserved thereby. The court may
notes as modified by the grant a continuance to enable the
renegotiation in December 1997. amendment to be made.
Without a cause of action, the
private respondent had no right to According to the trial court, and
maintain an action in court, and the sustained by the Court of Appeals,
this Section allows a complaint that
does not state a cause of action to cured by evidence presented during
be cured by evidence presented the trial.
without objection during the trial.
However, the curing effect
Thus, it ruled that even if the private
under Section 5 is applicable only if
respondent had no cause of action
a cause of action in fact exists at
when he filed the complaint for a
the time the complaint is filed, but
sum of money and damages
the complaint is defective for failure
because none of the three
to allege the essential facts. For
promissory notes was due yet, he
example, if a complaint failed to
could nevertheless recover on the
allege the fulfillment of a condition
first two promissory notes dated 7
precedent upon which the cause of
August 1996 and 14 March 1997,
action depends, evidence showing
which became due during the
that such condition had already
pendency of the case in view of the
been fulfilled when the complaint
introduction of evidence of their
was filed may be presented during
maturity during the trial.
the trial, and the complaint may
Such interpretation of Section 5, accordingly be amended
Rule 10 of the 1997 Rules of Civil thereafter. Thus,
[13]
in Roces v.
Procedure is erroneous. Jalandoni, this Court upheld the
[14]
be determined in a single
proceeding, thereby avoiding It thus follows that a complaint
multiplicity of suits. Section 5
[12]
whose cause of action has not yet
thereof applies to situations wherein accrued cannot be cured or
evidence not within the issues remedied by an amended or
raised in the pleadings is presented supplemental pleading alleging the
by the parties during the trial, and to existence or accrual of a cause of
conform to such evidence the action while the case is
pleadings are subsequently pending. Such an action is
[16]
Appeals.
vouchers served as receipts
As a rule, the findings of fact of evidencing private respondents
the trial court and the Court of acknowledgment of the payments
Appeals are final and conclusive made by the petitioner: two of which
and cannot be reviewed on appeal were signed by the private
to the Supreme Court as long as
[18]
respondent himself and all the
they are borne out by the record or others were signed by his
are based on substantial representatives. The private
evidence. The Supreme Court is
[19]
respondent even identified and
not a trier of facts, its jurisdiction confirmed the existence of these
being limited to reviewing only receipts during the
errors of law that may have been hearing. Significantly, cognizant
[23]
based on a misapprehension of
Under Article 1253 of the Civil
Code, if the debt produces interest,
payment of the principal shall not conformably with their new
be deemed to have been made until agreement and even continued
the interest has been covered. In paying during the pendency of the
this case, the private respondent case, the private respondent had no
would not have signed the receipts cause of action to file the complaint.
describing the payments made by It is only upon petitioners default in
the petitioner as capital repayment the payment of the monthly
if the obligation to pay the interest amortizations that a cause of action
was still subsisting. The receipts, as would arise and give the private
well as private respondents respondent a right to maintain an
summary of payments, lend action against the petitioner.
credence to petitioners claim that
Lastly, the petitioner contends
the payments were for the principal
that the Court of Appeals
loans and that the interests on the
obstinately included its President
three consolidated loans were
Infante and Vice-President Hegerty
waived by the private respondent
as appellants even if they did not
during the undisputed renegotiation
appeal the trial courts decision
of the loans on account of the
since they were found to be not
business reverses suffered by the
personally liable for the obligation of
petitioner at the time.
the petitioner. Indeed, the Court of
There was therefore a novation Appeals erred in referring to them
of the terms of the three promissory as defendants-appellants;
notes in that the interest was nevertheless, that error is no cause
waived and the principal was for alarm because its ruling was
payable in monthly installments of clear that the petitioner corporation
US$750. Alterations of the terms was the one solely liable for its
and conditions of the obligation obligation. In fact, the Court of
would generally result only in Appeals affirmed in toto the
modificatory novation unless such decision of the trial court, which
terms and conditions are means that it also upheld the latters
considered to be the essence of the ruling that Hegerty and Infante were
obligation itself. The resulting
[25]
not personally liable for the
novation in this case was, therefore, pecuniary obligations of the
of the modificatory type, not the petitioner to the private respondent.
extinctive type, since the obligation
In sum, based on our
to pay a sum of money remains in
disquisition on the lack of cause of
force.
action when the complaint for sum
Thus, since the petitioner did of money and damages was filed by
not renege on its obligation to pay the private respondent, the petition
the monthly installments
in the case at bar is impressed with
merit.
WHEREFORE, the petition is
hereby GRANTED. The Decision of
5 September 2003 of the Court of
Appeals in CA-G.R. CV No. 68109,
which affirmed the Decision of 5
May 2000 of the Regional Trial
Court of Baguio, Branch 59,
granting in part private respondents
complaint for sum of money and
damages, and its Resolution of 4
December 2003, which denied
petitioners motion for
reconsideration are hereby
REVERSED and SET ASIDE. The
complaint docketed as Civil Case
No. 4282-R is hereby DISMISSED
for lack of cause of action.
No costs.
SO ORDERED.
Quisumbing, Ynares-Santiago,
Carpio, and Azcuna, JJ., concur.