Professional Documents
Culture Documents
Cases:
1. Alday vs. FGU Insurance, G.R. No. 138822
THIRD DIVISION
SYNOPSIS
SYLLABUS
2. ID.; ID.; ID.; ID.; APPLICABLE WHEN THE PARTY RAISING IT HAS
ACTIVELY TAKEN PART IN THE VERY PROCEEDING WHICH HE
QUESTIONS; CASE AT BAR. — 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 first
time 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
question if he has actively taken part in the very proceedings which he questions,
belatedly objecting to the court's jurisdiction in the event that that the judgment or
order subsequently rendered is adverse to him. In this case, respondent actively
took part in the proceedings before the Court of Appeals by filing its appellee's
brief with the same. Its participation, when taken together with is 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.
3. ID.; CIVIL PROCEDURE; PLEADINGS; COUNTERCLAIM; COMPULSORY
COUNTERCLAIM; DEFINED. — 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. caSEAH
DECISION
GONZAGA-REYES, J : p
On 23 December 1998, the Court of Appeals 11 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
decision 12 is quoted herewith —
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 . . .
(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 . .
..
xxx xxx xxx
(19) . . . 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. . . . ."
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 . .
. ." 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, appellants 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 first 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 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. DaTEIc
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 as 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 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. IEDHAT
PHIL 962-976)
SECOND DIVISION
DECISION
VELASCO, JR., J : p
After the parties submitted their Memoranda, on July 23, 1998, the RTC
issued an Order denying the application for a writ of preliminary injunction,
reasoning that PGSMC had paid KOGIES USD 1,224,000, the value of the
machineries and equipment as shown in the contract such that KOGIES no
longer had proprietary rights over them. And finally, the RTC held that Art. 15
of the Contract as amended was invalid as it tended to oust the trial court or
any other court jurisdiction over any dispute that may arise between the
parties. KOGIES' prayer for an injunctive writ was denied. 10 The dispositive
portion of the Order stated:
WHEREFORE, in view of the foregoing consideration, this Court
believes and so holds that no cogent reason exists for this Court to
grant the writ of preliminary injunction to restrain and refrain defendant
from dismantling the machineries and facilities at the lot and building of
Worth Properties, Incorporated at Carmona, Cavite and transfer the
same to another site: and therefore denies plaintiff's application for a
writ of preliminary injunction.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to
Counterclaim. 11 KOGIES denied it had altered the quantity and lowered the
quality of the machinery, equipment, and facilities it delivered to the plant. It
claimed that it had performed all the undertakings under the contract and had
already produced certified samples of LPG cylinders. It averred that whatever
was unfinished was PGSMC's fault since it failed to procure raw materials due
to lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc. v.
Court of Appeals, 12 insisted that the arbitration clause was without question
valid.
After KOGIES filed a Supplemental Memorandum with Motion to
Dismiss 13 answering PGSMC's memorandum of July 22, 1998 and seeking
dismissal of PGSMC's counterclaims, KOGIES, on August 4, 1998, filed its
Motion for Reconsideration 14 of the July 23, 1998 Order denying its
application for an injunctive writ claiming that the contract was not merely for
machinery and facilities worth USD 1,224,000 but was for the sale of an "LPG
manufacturing plant" consisting of "supply of all the machinery and facilities"
and "transfer of technology" for a total contract price of USD 1,530,000 such
that the dismantling and transfer of the machinery and facilities would result in
the dismantling and transfer of the very plant itself to the great prejudice of
KOGIES as the still unpaid owner/seller of the plant. Moreover, KOGIES
points out that the arbitration clause under Art. 15 of the Contract as amended
was a valid arbitration stipulation under Art. 2044 of the Civil Code and as
held by this Court in Chung Fu Industries (Phils.), Inc. 15
In the meantime, PGSMC filed a Motion for Inspection of Things 16 to
determine whether there was indeed alteration of the quantity and lowering of
quality of the machineries and equipment, and whether these were properly
installed. KOGIES opposed the motion positing that the queries and issues
raised in the motion for inspection fell under the coverage of the arbitration
clause in their contract.
On September 21, 1998, the trial court issued an Order (1) granting
PGSMC's motion for inspection; (2) denying KOGIES' motion for
reconsideration of the July 23, 1998 RTC Order; and (3) denying KOGIES'
motion to dismiss PGSMC's compulsory counterclaims as these
counterclaims fell within the requisites of compulsory counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion for
Reconsideration 17 of the September 21, 1998 RTC Order granting inspection
of the plant and denying dismissal of PGSMC's compulsory counterclaims.
Ten days after, on October 12, 1998, without waiting for the resolution
of its October 2, 1998 urgent motion for reconsideration, KOGIES filed before
the Court of Appeals (CA) a petition for certiorari 18 docketed as CA-G.R. SP
No. 49249, seeking annulment of the July 23, 1998 and September 21, 1998
RTC Orders and praying for the issuance of writs of prohibition, mandamus,
and preliminary injunction to enjoin the RTC and PGSMC from inspecting,
dismantling, and transferring the machineries and equipment in the Carmona
plant, and to direct the RTC to enforce the specific agreement on arbitration to
resolve the dispute.
In the meantime, on October 19, 1998, the RTC denied KOGIES' urgent
motion for reconsideration and directed the Branch Sheriff to proceed with the
inspection of the machineries and equipment in the plant on October 28,
1998. 19
Thereafter, KOGIES filed a Supplement to the Petition 20 in CA-G.R. SP
No. 49249 informing the CA about the October 19, 1998 RTC Order. It also
reiterated its prayer for the issuance of the writs of prohibition, mandamus and
preliminary injunction which was not acted upon by the CA. KOGIES asserted
that the Branch Sheriff did not have the technical expertise to ascertain
whether or not the machineries and equipment conformed to the
specifications in the contract and were properly installed.
TaISDA
The issues arising from the contract between PGSMC and KOGIES on
whether the equipment and machineries delivered and installed were properly
installed and operational in the plant in Carmona, Cavite; the ownership of
equipment and payment of the contract price; and whether there was
substantial compliance by KOGIES in the production of the samples, given
the alleged fact that PGSMC could not supply the raw materials required to
produce the sample LPG cylinders, are matters proper for arbitration. Indeed,
we note that on July 1, 1998, KOGIES instituted an Application for Arbitration
before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as
amended. Thus, it is incumbent upon PGSMC to abide by its commitment to
arbitrate.
Corollarily, the trial court gravely abused its discretion in granting
PGSMC's Motion for Inspection of Things on September 21, 1998, as the
subject matter of the motion is under the primary jurisdiction of the mutually
agreed arbitral body, the KCAB in Korea.
In addition, whatever findings and conclusions made by the RTC
Branch Sheriff from the inspection made on October 28, 1998, as ordered by
the trial court on October 19, 1998, is of no worth as said Sheriff is not
technically competent to ascertain the actual status of the equipment and
machineries as installed in the plant.
For these reasons, the September 21, 1998 and October 19, 1998 RTC
Orders pertaining to the grant of the inspection of the equipment and
machineries have to be recalled and nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised on
whether the total contract price of USD 1,530,000 was for the whole plant and
its installation is beyond the ambit of a Petition for Certiorari.
Petitioner's position is untenable.
It is settled that questions of fact cannot be raised in an original action
for certiorari. 49 Whether or not there was full payment for the machineries and
equipment and installation is indeed a factual issue prohibited by Rule 65.
However, what appears to constitute a grave abuse of discretion is the
order of the RTC in resolving the issue on the ownership of the plant when it
is the arbitral body (KCAB) and not the RTC which has jurisdiction and
authority over the said issue. The RTC's determination of such factual issue
constitutes grave abuse of discretion and must be reversed and set aside.
RTC has interim jurisdiction to protect the rights of the parties
Anent the July 23, 1998 Order denying the issuance of the injunctive
writ paving the way for PGSMC to dismantle and transfer the equipment and
machineries, we find it to be in order considering the factual milieu of the
instant case.AcDaEH
Firstly, while the issue of the proper installation of the equipment and
machineries might well be under the primary jurisdiction of the arbitral body to
decide, yet the RTC under Sec. 28 of RA 9285 has jurisdiction to hear and
grant interim measures to protect vested rights of the parties. Sec. 28
pertinently provides:
SEC. 28. Grant of interim Measure of Protection. — (a) It is not
incompatible with an arbitration agreement for a party to request,
before constitution of the tribunal, from a Court to grant such
measure. After constitution of the arbitral tribunal and during arbitral
proceedings, a request for an interim measure of protection, or
modification thereof, may be made with the arbitral or to the extent
that the arbitral tribunal has no power to act or is unable to act
effectivity, the request may be made with the Court. The arbitral
tribunal is deemed constituted when the sole arbitrator or the third
arbitrator, who has been nominated, has accepted the nomination and
written communication of said nomination and acceptance has been
received by the party making the request.
(b) The following rules on interim or provisional relief shall be
observed:
Any party may request that provisional relief be granted against
the adverse party.
Such relief may be granted:
(i) to prevent irreparable loss or injury;
(ii) to provide security for the performance of any obligation;
(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or omission.
(c) The order granting provisional relief may be conditioned
upon the provision of security or any act or omission specified in the
order.
(d) Interim or provisional relief is requested by written
application transmitted by reasonable means to the Court or arbitral
tribunal as the case may be and the party against whom the relief is
sought, describing in appropriate detail the precise relief, the party
against whom the relief is requested, the grounds for the relief, and the
evidence supporting the request.
(e) The order shall be binding upon the parties.
(f) Either party may apply with the Court for assistance in
implementing or enforcing an interim measure ordered by an arbitral
tribunal.
(g) A party who does not comply with the order shall be liable for
all damages resulting from noncompliance, including all expenses, and
reasonable attorney's fees, paid in obtaining the order's judicial
enforcement. (Emphasis ours.)
Art. 17 (2) of the UNCITRAL Model Law on ICA defines an "interim
measure" of protection as:
Article 17. Power of arbitral tribunal to order interim measures
xxx xxx xxx
(2) An interim measure is any temporary measure, whether in
the form of an award or in another form, by which, at any time prior to
the issuance of the award by which the dispute is finally decided, the
arbitral tribunal orders a party to:
(a) Maintain or restore the status quo pending determination of
the dispute;
(b) Take action that would prevent, or refrain from taking action
that is likely to cause, current or imminent harm or prejudice to the
arbitral process itself;
DTISaH
It is thus beyond cavil that the RTC has authority and jurisdiction to
grant interim measures of protection.
Secondly, considering that the equipment and machineries are in the
possession of PGSMC, it has the right to protect and preserve the equipment
and machineries in the best way it can. Considering that the LPG plant was
non-operational, PGSMC has the right to dismantle and transfer the
equipment and machineries either for their protection and preservation or for
the better way to make good use of them which is ineluctably within the
management discretion of PGSMC.
Thirdly, and of greater import is the reason that maintaining the
equipment and machineries in Worth's property is not to the best interest of
PGSMC due to the prohibitive rent while the LPG plant as set-up is not
operational. PGSMC was losing PhP322,560 as monthly rentals or PhP3.87M
for 1998 alone without considering the 10% annual rent increment in
maintaining the plant.
Fourthly, and corollarily, while the KCAB can rule on motions or
petitions relating to the preservation or transfer of the equipment and
machineries as an interim measure, yet on hindsight, the July 23, 1998 Order
of the RTC allowing the transfer of the equipment and machineries given the
non-recognition by the lower courts of the arbitral clause, has accorded an
interim measure of protection to PGSMC which would otherwise been
irreparably damaged.
Fifth, KOGIES is not unjustly prejudiced as it has already been paid a
substantial amount based on the contract. Moreover, KOGIES is amply
protected by the arbitral action it has instituted before the KCAB, the award of
which can be enforced in our jurisdiction through the RTC. Besides, by our
decision, PGSMC is compelled to submit to arbitration pursuant to the valid
arbitration clause of its contract with KOGIES.
PGSMC to preserve the subject equipment and machineries
Finally, while PGSMC may have been granted the right to dismantle
and transfer the subject equipment and machineries, it does not have the right
to convey or dispose of the same considering the pending arbitral
proceedings to settle the differences of the parties. PGSMC therefore must
preserve and maintain the subject equipment and machineries with the
diligence of a good father of a family 51 until final resolution of the arbitral
proceedings and enforcement of the award, if any.
WHEREFORE, this petition is PARTLY GRANTED, in that:
(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is
REVERSED and SET ASIDE;
(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil
Case No. 98-117 are REVERSED and SET ASIDE;
(3) The parties are hereby ORDERED to submit themselves to the
arbitration of their dispute and differences arising from the subject Contract
before the KCAB; and
(4) PGSMC is hereby ALLOWED to dismantle and transfer the
equipment and machineries, if it had not done so, and ORDERED to preserve
and maintain them until the finality of whatever arbitral award is given in the
arbitration proceedings.
No pronouncement as to costs. IEAHca
SO ORDERED.
(Korea Technologies Co., Ltd. v. Lerma, G.R. No. 143581, [January 7, 2008],
|||
FIRST DIVISION
RESOLUTION
CORONA, J : p
Based on the foregoing, had these issues been tried separately, the
efforts of the RTC and the parties would have had to be duplicated. Clearly,
SMC's counterclaim, being logically related to Mercado's claim, was
compulsory in nature. 19 Consequently, the payment of docket fees was not
necessary for the RTC to acquire jurisdiction over the subject matter.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.
SO ORDERED.
(Mercado v. Court of Appeals, G.R. No. 169576 (Resolution), [October 17,
|||
SECOND DIVISION
DECISION
CALLEJO, SR., J : p
We are not convinced. Time and time again, this Court has consistently
held that the "payment of docket fees within the prescribed period is mandatory
for the perfection of an appeal. Without such payment, the appeal is not
perfected. The appellate court does not acquire jurisdiction over the subject
matter of the action and the decision sought to be appealed from becomes final
and executory." 22
It bears stressing that appeal is not a right, but a mere statutory
privilege. 23 Corollary to this principle is that the appeal must be exercised strictly
in accordance with the provisions set by law. Rule 41 of the Rules of Court
provides that an appeal to the CA from a case decided by the RTC in the
exercise of the latter's original jurisdiction shall be taken within fifteen (15) days
from the notice of judgment or final order appealed from. Such appeal is
perfected by filing a notice of appeal thereof with the court that rendered the
judgment or final order and, by serving a copy of that notice upon the adverse
party, 24 and by paying within this same period the full amount of the appellate
court docket and other lawful fees to the clerk of court. 25
The payment of the docket fees within this period is a condition sine qua
non to the perfection of the appeal. Contrary to the petitioners' predication, the
payment of the appellate docket and other lawful fees is not a mere technicality
of law or procedure. It is an essential requirement, without which the decision or
final order appealed from would become final and executory as if no appeal was
filed at all.
SO ORDERED.
(Navarro v. Metropolitan Bank & Trust Company, G.R. No. 138031, [May 27,
|||
THIRD DIVISION
DECISION
CARPIO MORALES, J : p
COURT JDF
P69,756,000.00 P69,606,000.00
- 150,000.00 x .003
–––––––––––– –––––––––––––
69,606,000.00 208,818.00
x .002 + 450.00
–––––––––––– –––––––––––––
139,212.00 P209,268.00
+ 150.00
––––––––––––
P139,362.00
LEGAL: P139,362.00
+ 209,268.00
–––––––––––
P348,630.00 x 1% = P3,486.30
P139,362.00
+ 209,268.00
3,486.00
––––––––––
P352,116.30 — Total fees paid by the plaintiff
To the complaint, the defendants-herein petitioners filed on October 12,
1998 a Motion to Dismiss 9 on the ground that BNP failed to pay the correct
docket fees to thus prevent the trial court from acquiring jurisdiction over the
case. 10 As additional ground, petitioners raised prematurity of the complaint,
BNP not having priorly sent any demand letter. 11
By Order 12 of August 3, 1999, Branch 148 of the Makati RTC denied
petitioners' Motion to Dismiss, viz:
Resolving the first ground relied upon by the defendant, this court
believes and so hold that the docket fees were properly paid. It is the
Office of the Clerk of Court of this station that computes the correct
docket fees, and it is their duty to assess the docket fees correctly, which
they did.EICSTa
Even granting arguendo that the docket fees were not properly
paid, the court cannot just dismiss the case. The Court has not yet
ordered (and it will not in this case) to pay the correct docket fees, thus
the Motion to dismiss is premature, aside from being without any legal
basis.
As held in the case of National Steel Corporation vs. CA, G.R. No.
123215, February 2, 1999, the Supreme Court said:
xxx xxx xxx
Although the payment of the proper docket fees is a
jurisdictional requirement, the trial court may allow the plaintiff in
an action to pay the same within a reasonable time within the
expiration of applicable prescription or reglementary period. If the
plaintiff fails to comply with this requirement, the defendant should
timely raise the issue of jurisdiction or else he would be
considered in estoppel. In the latter case, the balance between
appropriate docket fees and the amount actually paid by the
plaintiff will be considered a lien or (sic) any award he may obtain
in his favor.
As to the second ground relied upon by the defendants, in that a
review of all annexes to the complaint of the plaintiff reveals that there is
not a single formal demand letter for defendants to fulfill the terms and
conditions of the three (3) trust agreements.
In this regard, the court cannot sustain the submission of
defendant. As correctly pointed out by the plaintiff, failure to make a
formal demand for the debtor to pay the plaintiff is not among the legal
grounds for the dismissal of the case. Anyway, in the appreciation of the
court, this is simply evidentiary.
xxx xxx xxx
WHEREFORE, for lack of merit, the Motion to Dismiss interposed
by the defendants is hereby DENIED. 13 (Underscoring supplied)
Petitioners filed a motion for reconsideration 14 of the denial of their Motion
to Dismiss, but it was denied by the trial court by Order 15 of October 3, 2000.
Petitioners thereupon brought the case on certiorari and mandamus 16 to
the Court of Appeals which, by Decision 17 of July 25, 2001, denied it in this wise:
. . . Section 7(a) of Rule 141 of the Rules of Court excludes
interest accruing from the principal amount being claimed in the pleading
in the computation of the prescribed filing fees. The complaint was
submitted for the computation of the filing fee to the Office of the Clerk of
Court of the Regional Trial Court of Makati City which made an
assessment that respondent paid accordingly. What the Office of the
Clerk of Court did and the ruling of the respondent Judge find support in
the decisions of the Supreme Court in Ng Soon vs. Alday and Tacay vs.
RTC of Tagum, Davao del Norte. In the latter case, the Supreme Court
explicitly ruled that "where the action is purely for recovery of money or
damages, the docket fees are assessed on the basis of the aggregate
amount claimed, exclusive only of interests and costs."
Assuming arguendo that the correct filing fees was not made, the
rule is that the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such payment, the
defect is cured and the court may properly take cognizance of the action
unless in the meantime prescription has set in and consequently barred
the right of action. Here respondent Judge did not make any finding, and
rightly so, that the filing fee paid by private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the
Office of the Clerk of Court of the RTC of Makati pegged it at P43.21 to
US$1. In the absence of any office guide of the rate of exchange which
said court functionary was duty bound to follow, the rate he applied is
presumptively correct. THADEI
In case the value of the property or estate or the sum claim is less
or more in accordance with the appraisal of the court, the difference of
fees shall be refunded or paid as the case may be.
When the complaint in this case was filed in 1998, however, as correctly
pointed out by petitioners, Rule 141 had been amended by Administrative
Circular No. 11-94 29 which provides:
BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994,
PURSUANT TO SECTION 5 (5) OF ARTICLE VIII OF THE
CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8
(a) and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO
READ AS FOLLOWS:
RULE 141
LEGAL FEES
xxx xxx xxx
Sec. 7. Clerks of Regional Trial Courts
(a) For filing an action or a permissive counterclaim or money
claim against an estate not based on judgment, or for filing with leave of
court a third-party, fourth-party, etc. complaint, or a complaint in
intervention, and for all clerical services in the same, if the total sum
claimed, inclusive of interest, damages of whatever kind, attorney's
fees, litigation expenses, and costs, or the stated value of the
property in litigation, is:
1. Not more than P100,000.00 P400.00
2. P100,000.00, or more but not more than P150,000.00 600.00
3. For each P1,000.00 in excess of P150,000.00 5.00
xxx xxx xxx
Sec. 8. Clerks of Metropolitan and Municipal Trial Courts
(a) For each civil action or proceeding, where the value of the
subject matter involved, or the amount of the demand, inclusive of
interest, damages or whatever kind, attorney's fees, litigation
expenses, and costs, is:
1. Not more than P20,000.00 P120.00
2. More than P20,000.00 but not more than P100,000.00 400.00
3. More than P100,000.00 but not more than P200,000.00 850.00
(Emphasis and underscoring supplied)
The clerk of court should thus have assessed the filing fee by taking into
consideration "the total sum claimed, inclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses, and costs, or the stated value of the
property in litigation." Respondent's and the Court of Appeals' reliance then
on Tacay was not in order.
Neither was, for the same reason, the Court of Appeals' reliance on
the 1989 case of Ng Soon v. Alday, 30 where this Court held:
. . . The failure to state the rate of interest demanded was not
fatal not only because it is the Courts which ultimately fix the same, but
also because Rule 141, Section 5(a) of the Rules of Court, itemizing
the filing fees, speaks of "the sum claimed, exclusive of interest."
This clearly implies that the specification of the interest rate is not
that indispensable.
Factually, therefore, not everything was left to "guesswork" as
respondent Judge has opined. The sums claimed were ascertainable,
sufficient enough to allow a computation pursuant to Rule 141, section
5(a).
Furthermore, contrary to the position taken by respondent
Judge, the amounts claimed need not be initially stated with
mathematical precision. The same Rule 141, section 5(a) (3rd
paragraph), allows an appraisal "more or less." 31 Thus:
"In case the value of the property or estate or the sum claimed is
less or more in accordance with the appraisal of the court, the difference
of fee shall be refunded or paid as the case may be."
In other words, a final determination is still to be made by the
Court, and the fees ultimately found to be payable will either be
additionally paid by the party concerned or refunded to him, as the case
may be. The above provision clearly allows an initial payment of the filing
fees corresponding to the estimated amount of the claim subject to
adjustment as to what later may be proved.
". . . there is merit in petitioner's claim that the third paragraph of
Rule 141, Section 5(a) clearly contemplates a situation where an amount
is alleged or claimed in the complaint but is less or more than what is
later proved. If what is proved is less than what was claimed, then a
refund will be made; if more, additional fees will be exacted. Otherwise
stated, what is subject to adjustment is the difference in the fee and not
the whole amount" (Pilipinas Shell Petroleum Corp., et als., vs. Court of
Appeals, et als., G.R. No. 76119, April 10, 1989). 32 (Emphasis and
underscoring supplied) IaEACT
Respecting the Court of Appeals' conclusion that the clerk of court did not
err when he applied the exchange rate of US$1 = P43.00 "[i]n the absence of any
office guide of the rate of exchange which said court functionary was duty bound
to follow,[hence,] the rate he applied is presumptively correct," the same does not
lie. The presumption of regularity of the clerk of court's application of the
exchange rate is not conclusive. 33 It is disputable. 34 As such, the presumption
may be overturned by the requisite rebutting evidence. 35 In the case at bar,
petitioners have adequately proven with documentary evidence 36 that the
exchange rate when the complaint was filed on September 7, 1998 was US$1 =
P43.21.
In fine, the docket fees paid by respondent were insufficient.
With respect to petitioner's argument that the trial court did not acquire
jurisdiction over the case in light of the insufficient docket fees, the same does
not lie.
True, in Manchester Development Corporation v. Court of Appeals, 37 this
Court held that the court acquires jurisdiction over any case only upon the
payment of the prescribed docket fees, 38 hence, it concluded that the trial court
did not acquire jurisdiction over the case.
It bears emphasis, however, that the ruling in Manchester was clarified
in Sun Insurance Office, Ltd. (SIOL) v. Asuncion 39 when this Court held that in
the former there was clearly an effort to defraud the government in avoiding to
pay the correct docket fees, whereas in the latter the plaintiff demonstrated his
willingness to abide by paying the additional fees as required.
The principle in Manchester could very well be applied in the
present case. The pattern and the intent to defraud the government of
the docket fee due it is obvious not only in the filing of the original
complaint but also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional
docket fee until the case was decided by this Court on May 7,
1987. Thus, in Manchester, due to the fraud committed on the
government, this Court held that the court a quo did not acquire
jurisdiction over the case and that the amended complaint could
not have been admitted inasmuch as the original complaint was
null and void.
In the present case, a more liberal interpretation of the rules
is called for considering that, unlike Manchester, private
respondent demonstrated his willingness to abide by the rules by
paying the additional docket fees as required. The promulgation of
the decision in Manchester must have had that sobering influence on
private respondent who thus paid the additional docket fee as ordered by
the respondent court. It triggered his change of stance by manifesting his
willingness to pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was
paid is still insufficient considering the total amount of the claim. This is a
matter which the clerk of court of the lower court and/or his duly
authorized docket clerk or clerk in charge should determine and,
thereafter, if any amount is found due, he must require the private
respondent to pay the same.
Thus, the Court rules as follows:
1. 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 also
allow payment of said fee within a reasonable time but also in no case
beyond its applicable prescriptive or reglementary period. ASHaTc
THIRD DIVISION
DECISION
REYES, R.T., J : p
Salak and respondent expressed willingness to pay but since they were
then short on cash, Salak proposed to sell to petitioner a house and lot titled
in the name of respondent. Petitioner welcomed the proposal after consulting
his wife, Cynthia. Cynthia, on the other hand, further agreed to pay the
mortgage loan of respondent over the subject property to a certain Jojo Lee in
the amount of P295,000.00 as the property was then set to be publicly
auctioned on February 17, 1997.8
To formalize their amicable settlement, Cynthia, Salak and respondent
executed a written agreement. 9 They stipulated that respondent would sell,
subject to repurchase, her residential property in favor of Cynthia for the total
amount of P527,372.00 broken down, as follows: (1) P295,000.00 for the
amount paid by Cynthia to Lee to release the mortgage on the property; and
(2) P232,372.00, which is the amount due to GAB Rent-A-Car. Cynthia also
agreed to desist from pursuing the complaint against Salak and respondent. 10
Respondent and petitioner also executed a separate deed of sale with
right to repurchase, 11 specifying, among others, that: (1) respondent, as
vendor, shall pay capital gains tax, current real estate taxes and utility bills
pertaining to the property; (2) if respondent fails to repurchase the property
within 30 days from the date of the deed, she and her assigns shall
immediately vacate the premises and deliver its possession to petitioner
without need of a judicial order; and (3) respondent's refusal to do so will
entitle petitioner to take immediate possession of the property. 12
Respondent failed to repurchase the property within the stipulated
period. As a result, petitioner filed, on June 5, 1998, a complaint for specific
performance or recovery of possession, for sum of money, for consolidation of
ownership and damages against respondent and other unnamed persons
before the RTC of Olongapo City. 2005jur
SO ORDERED. 20
Respondents failed to interpose a timely appeal. However, on
September 10, 2004, respondent Unangst filed a petition for relief pursuant to
Section 38 of the 1997 Rules on Civil Procedure. She argued that she learned
of the decision of the RTC only on September 6, 2004 when she received a
copy of the motion for execution filed by petitioner. 21
Petitioner, on the other hand, moved for the dismissal of respondent's
petition on the ground that the latter paid an insufficient sum of P200.00 as
docket fees. 22
It appears that respondent Unangst initially paid P200.00 as docket
fees as this was the amount assessed by the Clerk of Court of the
RTC. 23 Said amount was insufficient as the proper filing fees amount to
P1,715.00. Nevertheless, the correct amount was subsequently paid by said
respondent on February 22, 2005. 24
In their comment, 25 respondents countered that they should not be
faulted for paying deficient docket fees as it was due to an erroneous
assessment of the Clerk of Court. 26
The RTC granted the petition for relief. Subsequently, it directed
respondents to file a notice of appeal within twenty-four (24) hours from
receipt of the order.27 Accordingly, on February 23, 2005, respondents filed
their notice of appeal. 28
Respondents contended before the CA that the RTC erred in: (1) not
annulling the deed of sale with right to repurchase; (2) declaring that the deed
of sale with right to repurchase is a real contract of sale; (3) ordering the
consolidation of ownership of the subject property in the name of
petitioner. 29 They argued that respondent Unangst's consent to the deed of
sale with right to repurchase was procured under duress and that even
assuming that her consent was freely given, the contract partakes of the
nature of an equitable mortgage. 30
On the other hand, petitioner insisted, among others, that although the
petition for relief of respondents was filed on time, the proper filing fees for
said petition were paid beyond the 60-day reglementary period. He posited
that jurisdiction is acquired by the court over the action only upon full payment
of prescribed docket fees. 31 IAEcaH
CA Disposition
In a Decision 32 dated April 7, 2006, the CA reversed and set aside the
RTC judgment. 33 The dispositive part of the appellate court's decision reads,
thus:
IN VIEW OF ALL THE FOREGOING, the instant appeal is
hereby GRANTED, the challenged Decision dated July 29, 2004
hereby (sic) REVERSED and SET ASIDE, and a new one entered
declaring the Deed of Sale With Right of Repurchase dated February
4, 1997 as an equitable mortgage. No cost.
SO ORDERED. 34
The CA declared that the Deed of Sale with Right of Repurchase
executed by the parties was an equitable mortgage. On the procedural aspect
pertaining to the petition for relief filed by respondent Unangst, the CA ruled
that "the trial court, in opting to apply the rules liberally, cannot be faulted for
giving due course to the questioned petition for relief which enabled
appellants to interpose the instant appeal." 35 It ratiocinated:
Appellee recognizes the timely filing of appellants' petition for
relief to be able to appeal judgment but nonetheless points out that the
proper filing fees were paid beyond the 60-day reglementary period.
Arguing that the court acquires jurisdiction over the action only upon
full payment of the prescribed docket fees, he submits that the trial
court erred in granting appellants' petition for relief despite the late
payment of the filing fees.
While this Court is fully aware of the mandatory nature of the
requirement of payment of appellate docket fee, the High Court has
recognized that its strict application is qualified by the following: first,
failure to pay those fees within the reglementary period allows only
discretionary, not automatic, dismissal; second, such power should be
used by the court in conjunction with its exercise of sound discretion in
accordance with the tenets of justice and fair play, as well as with a
great deal of circumspection in consideration of all attendant
circumstances ( Meatmasters International Corporation v. Lelis
Integrated Development Corporation,452 SCRA 626 [2005], citing La
Salette College v. Pilotin, 418 SCRA 380 [2003]). DHEcCT
Applied in the instant case, the docket fees were admittedly paid
only on February 22, 2005, or a little less than two (2) months after the
period for filing the petition lapsed. Yet, this matter was sufficiently
explained by appellants. The records bear out that appellants initially
paid P200.00 as docket fees because this was the amount assessed
by the Clerk of Court of the RTC of Olongapo City (p. 273, Records).
As it turned out, the fees paid was insufficient, the proper filing fees
being P1,715.00, which was eventually paid by appellants on February
1, 2005 (p. 296, Records). As such, appellants cannot be faulted for
their failure to pay the proper docket fees for, given the prevailing
circumstances, such failure was clearly not a dilatory tactic nor
intended to circumvent the Rules of Court. On the contrary, appellants
demonstrated their willingness to pay the docket fees when they
subsequently paid on the same day they were assessed the correct
fees (p. 299, Records). Notably, in Yambao v. Court of Appeals (346
SCRA 141 [2000]), the High Court declared therein that "the appellate
court may extend the time for the payment of the docket fees if
appellants is able to show that there is a justifiable reason for his
failure to pay the correct amount of docket fees within the prescribed
period, like fraud, accident, mistake, excusable negligence, or a similar
supervening casualty, without fault on the part of appellant." Verily, the
trial court, in opting to apply the rules liberally, cannot be faulted for
giving due course to the questioned petition for relief which enabled
appellants to interpose the instant appeal. 36
On the substantial issues, the CA concluded that "While the records is
bereft of any proof or evidence that appellee employed unlawful or improper
pressure against appellant Unangst to give her consent to the contract of sale,
there is, nevertheless, sufficient basis to hold the subject contract as one of
equitable mortgage." 37 It explained: TaDAHE
In not a few instances, the Court relaxed the rigid application of the
rules of procedure to afford the parties the opportunity to fully ventilate their
cases on the merits. This is in line with the time-honored principle that cases
should be decided only after giving all parties the chance to argue their
causes and defenses. 45 For, it is far better to dispose of a case on the merit
which is a primordial end, rather than on a technicality, if it be the case, that
may result in injustice. 46 The emerging trend in the rulings of this Court is to
afford every party-litigant the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities. 47
As early as 1946, in Segovia v. Barrios, 48 the Court ruled that where an
appellant in good faith paid less than the correct amount for the docket fee
because that was the amount he was required to pay by the clerk of court,
and he promptly paid the balance, it is error to dismiss his appeal because
"(e)very citizen has the right to assume and trust that a public officer charged
by law with certain duties knows his duties and performs them in accordance
with law. To penalize such citizen for relying upon said officer in all good faith
is repugnant to justice." 49
Technicality and procedural imperfections should thus not serve as
bases of decisions. 50 In that way, the ends of justice would be better served.
For, indeed, the general objective of procedure is to facilitate the application
of justice to the rival claims of contending parties, bearing always in mind that
procedure is not to hinder but to promote the administration of justice. 51
We go now to the crux of the petition. Should the deed of sale with right
to repurchase executed by the parties be construed as an equitable
mortgage? This is the pivotal question here.
According to petitioner, the deed should not be construed as an
equitable mortgage as it does not fall under any of the instances mentioned in
Article 1602 of the Civil Code where the agreement can be construed as an
equitable mortgage. He added that the "language and terms of the Deed of
Sale with Right to Repurchase executed by respondent in favor of the petition
are clear and unequivocal. Said contract must be construed with its literal
sense." 52 HIEASa
We cannot agree.
Respondent is correct in alleging that the deed of sale with right to
repurchase qualifies as an equitable mortgage under Article 1602. She merely
secured the payment of the unpaid car rentals and the amount advanced by
petitioner to Jojo Lee.
The transaction between the parties is one of equitable mortgage and
not a sale with right to purchase as maintained by petitioners. Article 1602 of
the New Civil Code provides that the contract is presumed to be an equitable
mortgage in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually
inadequate;
(2) When the vendor remains in possession as lessee or
otherwise;
(3) When upon or after the expiration of the right to repurchase
another instrument extending the period of redemption or granting a
new period is executed;
(4) When the purchaser retains for himself a part of the
purchase price;
(5) When the vendor binds himself to pay the taxes on the thing
sold; DSEIcT
(6) In any other case where it may be fairly inferred that the
real intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit
to be received by the vendee as rent or otherwise shall be considered
as interest which shall be subject to the usury laws. 53 (Emphasis ours)
The conclusion that the deed of sale with right to repurchase is an
equitable mortgage is buttressed by the following:
First, before executing the deed, respondent and Salak were under
police custody due to the complaint lodged against them by petitioner. They
were sorely pressed for money, as they would not be released from custody
unless they paid petitioner. It was at this point that respondent was
constrained to execute a deed of sale with right to repurchase. Respondent
was in no position whatsoever to bargain with their creditor, petitioner. Nel
consensui tam contrarium est quam vis atqui metus. There can be no consent
when under force or duress. Bale wala ang pagsang-ayon kung ito'y
nakuha sa pamimilit o paraang di malaya. cDHAES
Article 1602 of the Civil Code is designed primarily to curtail the evils
brought about by contracts of sale with right of repurchase, such as the
circumvention of the laws against usury and pactum commissorium. 65
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
||| (Bautista v. Unangst, G.R. No. 173002, [July 4, 2008], 579 PHIL 528-548)
THIRD DIVISION
DECISION
CHICO-NAZARIO, J : p
38376 P9,340,000.00
29918 P28,000,000.00
38374 P12,000,000.00
39232 P1,600,000.00
39225 P1,600,000.00
Petitioner could choose to pay off its indebtedness with individual or all five
parcels of land; or it could redeem said properties by paying respondents Tan
and Obiedo the following prices for the same, inclusive of interest and penalties:
TCT No. Redemption Price
38376 P25,328,939.00
29918 P35,660,800.00
38374 P28,477,600.00
39232 P6,233,381.00
39225 P6,233,381.00
In the event that petitioner is able to redeem any of the afore-mentioned
parcels of land, the Deed of Absolute Sale covering the said property shall be
nullified and have no force and effect; and respondents Tan and Obiedo shall
then return the owner's duplicate of the corresponding TCT to petitioner and
also execute a Deed of Discharge of Mortgage. However, if petitioner is
unable to redeem the parcels of land within the period agreed upon,
respondents Tan and Obiedo could already present the Deeds of Absolute
Sale covering the same to the Office of the Register of Deeds for Naga City
so respondents Tan and Obiedo could acquire TCTs to the said properties in
their names. ACDTcE
3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376,
39225 and 39232, all dated January 3, 2006, the same being in
contravention of law;
4. Ordering the [respondents] jointly and solidarily to pay the [petitioner]
actual damages of at least P300,000.00; attorney's fees in the amount of
P100,000.00 plus P1,000.00 per court attendance of counsel as
appearance fee; litigation expenses in the amount of at least P10,000.00
and exemplary damages in the amount of P300,000.00, plus the costs.
[Petitioner] further prays for such other reliefs as may be proper, just and
equitable under the premises. 14
Upon filing its Complaint with the RTC on 16 March 2006, petitioner
paid the sum of P13,644.25 for docket and other legal fees, as assessed by
the Office of the Clerk of Court. The Clerk of Court initially considered Civil
Case No. 2006-0030 as an action incapable of pecuniary estimation and
computed the docket and other legal fees due thereon according to Section 7
(b) (1), Rule 141 of the Rules of Court.
Only respondent Tan filed an Answer 15 to the Complaint of petitioner.
Respondent Tan did admit that meetings were held with Mr. Sia, as the
representative of petitioner, to thresh out Mr. Sia's charge that the
computation by respondents Tan and Obiedo of the interests, surcharges and
penalties accruing on the loan of petitioner was replete with errors and
uncertainties. However, Mr. Sia failed to back up his accusation of errors and
uncertainties and to present his own final computation of the amount due.
Disappointed and exasperated, respondents Tan and Obiedo informed Mr.
Sia that they had already asked respondent Atty. Reyes to come over to
notarize the Deeds of Absolute Sale. Respondent Atty. Reyes asked Mr. Sia
whether it was his signature appearing above his printed name on the Deeds
of Absolute Sale, to which Mr. Sia replied yes. On 4 January 2006, Mr. Sia still
failed to establish his claim of errors and uncertainties in the computation of
the total amount which petitioner must pay respondent Tan and Obiedo. Mr.
Sia, instead, sought a nine-month extension for paying the loan obligation of
petitioner and the reduction of the interest rate thereon to only one percent
(1%) per month. Respondents Tan and Obiedo rejected both demands. HASDcC
Respondent Tan maintained that the Deeds of Absolute Sale were not
executed merely as securities for the loan of petitioner. The Deeds of
Absolute Sale over the five parcels of land were the consideration for the
payment of the total indebtedness of petitioner to respondents Tan and
Obiedo, and the condonation of the 15-month interest which already accrued
on the loan, while providing petitioner with the golden opportunity to still
redeem all or even portions of the properties covered by said Deeds.
Unfortunately, petitioner failed to exercise its right to redeem any of the said
properties.
Belying that they forcibly took possession of the five parcels of land,
respondent Tan alleged that it was Mr. Sia who, with the aid of armed men, on
board a Sports Utility Vehicle and a truck, rammed into the personnel of
respondents Tan and Obiedo causing melee and disturbance. Moreover, by
the execution of the Deeds of Absolute Sale, the properties subject thereof
were, ipso jure, delivered to respondents Tan and Obiedo. The demolition of
the existing structures on the properties was nothing but an exercise of
dominion by respondents Tan and Obiedo.
Respondent Tan, thus, sought not just the dismissal of the Complaint of
petitioner, but also the grant of his counterclaim. The prayer in his Answer is
faithfully reproduced below:
Wherefore, premises considered, it is most respectfully prayed that, after
due hearing, judgment be rendered dismissing the complaint, and on the
counterclaim, [herein petitioner] and Ruben Sia, be ordered to indemnify,
jointly and severally [herein respondents Tan and Obiedo] the amounts
of not less than P10,000,000.00 as liquidated damages and the further
sum of not less than P500,000.00 as attorney's fees. In the alternative,
and should it become necessary, it is hereby prayed that [petitioner] be
ordered to pay herein [respondents Tan and Obiedo] the entire principal
loan of P95,700,620.00, plus interests, surcharges and penalties
computed from March 17, 2005 until the entire sum is fully paid,
including the amount of P74,678,647.00 foregone interest covering the
period from October 1, 2004 to December 31, 2005 or for a total of
fifteen (15) months, plus incidental expenses as may be proved in court,
in the event that Annexes "G" to "L" be nullified. Other relief and
remedies as are just and equitable under the premises are hereby
prayed for. 16CacTIE
Compared with Quieting of Title, the latter action is brought when there
is cloud on the title to real property or any interest therein or to prevent a
cloud from being cast upon title to the real property (Art. 476, Civil Code
of the Philippines) and the plaintiff must have legal or equitable title to
or interest in the real property which is the subject matter of the
action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is
required to pay the fees in accordance with paragraph (a) of Section 7 of
the said Amended Administrative Circular No. 35-2004, hence, with
more reason that the [petitioner] who no longer has title to the real
properties subject of the instant case must be required to pay the
required fees in accordance with Section 7(a) of the Amended
Administrative Circular No. 35-2004 afore-mentioned.
Furthermore, while [petitioner] claims that the action for declaration of
nullity of deed of sale and memorandum of agreement is one incapable
of pecuniary estimation, however, as argued by the [respondent Tan],
the issue as to how much filing and docket fees should be paid was
never raised as an issue in the case ofRussell vs. Vestil, 304 SCRA
738. aSITDC
In the Petition at bar, the RTC found, and the Court of Appeals affirmed,
that petitioner did not pay the correct amount of docket fees for Civil Case No.
2006-0030. According to both the trial and appellate courts, petitioner should
pay docket fees in accordance with Section 7 (a), Rule 141 of the Rules of
Court, as amended. Consistent with the liberal tenor of Sun Insurance, the
RTC, instead of dismissing outright petitioner's Complaint in Civil Case No.
2006-0030, granted petitioner time to pay the additional docket fees. Despite
the seeming munificence of the RTC, petitioner refused to pay the additional
docket fees assessed against it, believing that it had already paid the correct
amount before, pursuant to Section 7 (b) (1), Rule 141 of the Rules of Court,
as amended.
Relevant to the present controversy are the following provisions under
Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC 30 and
Supreme Court Amended Administrative Circular No. 35-2004: 31
SEC. 7. Clerks of Regional Trial Courts. —
(a) For filing an action or a permissive OR COMPULSORY counterclaim,
CROSS-CLAIM, or money claim against an estate not based on
judgment, or for filing a third-party, fourth-party, etc. complaint, or a
complaint-in-intervention, if the total sum claimed, INCLUSIVE OF
INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF
WHATEVER KIND, AND ATTORNEY'S FEES, LITIGATION
EXPENSES AND COSTS and/or in cases involving property, the FAIR
MARKET value of the REAL property in litigation STATED IN THE
CURRENT TAX DECLARATION OR CURRENT ZONAL VALUATION
OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS
HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE
PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL
PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL
PROPERTY IN LITIGATION AS ALLEGED BY THE CLAIMANT, is: IHcSCA
A real action is one in which the plaintiff seeks the recovery of real
property; or, as indicated in what is now Section 1, Rule 4 of the Rules of
Court, a real action is an action affecting title to or recovery of possession of
real property. 33
Section 7, Rule 141 of the Rules of Court, prior to its amendment
by A.M. No. 04-2-04-SC, had a specific paragraph governing the assessment
of the docket fees for real action, to wit:
In a real action, the assessed value of the property, or if there is none,
the estimated value thereof shall be alleged by the claimant and shall be
the basis in computing the fees.
It was in accordance with the afore-quoted provision that the Court,
in Gochan v. Gochan, 34 held that although the caption of the complaint filed
by therein respondents Mercedes Gochan, et al. with the RTC was
denominated as one for "specific performance and damages", the relief
sought was the conveyance or transfer of real property, or ultimately, the
execution of deeds of conveyance in their favor of the real properties
enumerated in the provisional memorandum of agreement. Under these
circumstances, the case before the RTC was actually a real action, affecting
as it did title to or possession of real property. Consequently, the basis for
determining the correct docket fees shall be the assessed value of the
property, or the estimated value thereof as alleged in the complaint. But
sinceMercedes Gochan failed to allege in their complaint the value of the real
properties, the Court found that the RTC did not acquire jurisdiction over the
same for non-payment of the correct docket fees. EASIHa
Even the amended petition, therefore, should have been expunged from
the records.
In fine, we rule and so hold that the trial court never acquired jurisdiction
over its Civil Case No. Q-95-24791. 36
It was in Serrano v. Delica, 37 however, that the Court dealt with a
complaint that bore the most similarity to the one at bar. Therein respondent
Delica averred that undue influence, coercion, and intimidation were exerted
upon him by therein petitioners Serrano, et al. to effect transfer of his
properties. Thus, Delica filed a complaint before the RTC against Serrano, et
al., praying that the special power of attorney, the affidavit, the new titles
issued in the names of Serrano, et al., and the contracts of sale of the
disputed properties be cancelled; that Serrano, et al. be ordered to pay
Delica, jointly and severally, actual, moral and exemplary damages in the
amount of P200,000.00, as well as attorney's fee of P200,000.00 and costs of
litigation; that a TRO and a writ of preliminary injunction be issued ordering
Serrano, et al. to immediately restore him to his possession of the parcels of
land in question; and that after trial, the writ of injunction be made permanent.
The Court dismissed Delica's complaint for the following reasons:
A careful examination of respondent's complaint is that it is a real action.
In Paderanga vs. Buissan, we held that "in a real action, the plaintiff
seeks the recovery of real property, or, as stated in Section 2(a), Rule 4
of the Revised Rules of Court, a real action is one 'affecting title to real
property or for the recovery of possession of, or for partition or
condemnation of, or foreclosure of a mortgage on a real property.'"
Obviously, respondent's complaint is a real action involving not only the
recovery of real properties, but likewise the cancellation of the titles
thereto.
Considering that respondent's complaint is a real action, the Rule
requires that "the assessed value of the property, or if there is none, the
estimated value thereof shall be alleged by the claimant and shall be the
basis in computing the fees."ECSHAD
We note, however, that neither the "assessed value" nor the "estimated
value" of the questioned parcels of land were alleged by respondent in
both his original and amended complaint. What he stated in his
amended complaint is that the disputed realties have a "BIR zonal
valuation" of P1,200.00 per square meter. However, the alleged "BIR
zonal valuation" is not the kind of valuation required by the Rule. It is
the assessed value of the realty. Having utterly failed to comply with the
requirement of the Rule that he shall allege in his complaint the
assessed value of his real properties in controversy, the correct docket
fee cannot be computed. As such, his complaint should not have been
accepted by the trial court. We thus rule that it has not acquired
jurisdiction over the present case for failure of herein respondent to pay
the required docket fee. On this ground alone, respondent's complaint is
vulnerable to dismissal. 38
Brushing aside the significance of Serrano, petitioner argues that said
decision, rendered by the Third Division of the Court, and not by the Court en
banc,cannot modify or reverse the doctrine laid down in Spouses De Leon v.
Court of Appeals. 39 Petitioner relies heavily on the declaration of this Court
in Spouses De Leon that an action for annulment or rescission of a contract of
sale of real property is incapable of pecuniary estimation.
The Court, however, does not perceive a contradiction
between Serrano and the Spouses De Leon. The Court calls attention to the
following statement inSpouses De Leon: "A review of the jurisprudence of this
Court indicates that in determining whether an action is one the subject matter
of which is not capable of pecuniary estimation, this Court has adopted the
criterion of first ascertaining the nature of the principal action or remedy
sought". Necessarily, the determination must be done on a case-to-case
basis, depending on the facts and circumstances of each. What petitioner
conveniently ignores is that in Spouses De Leon, the action therein that
private respondents instituted before the RTC was "solely for annulment or
rescission" of the contract of sale over a real property. 40 There appeared to
be no transfer of title or possession to the adverse party. Their complaint
simply prayed for:
1. Ordering the nullification or rescission of the Contract of Conditional
Sale (Supplementary Agreement) for having violated the rights of
plaintiffs (private respondents) guaranteed to them under Article 886 of
the Civil Code and/or violation of the terms and conditions of the said
contract.ADHaTC
2. Declaring void ab initio the Deed of Absolute Sale for being absolutely
simulated; and
3. Ordering defendants (petitioners) to pay plaintiffs (private
respondents) attorney's fees in the amount of P100,000.00. 41
As this Court has previously discussed herein, the nature of Civil Case
No. 2006-0030 instituted by petitioner before the RTC is closer to that
of Serrano, rather than of Spouses De Leon, hence, calling for the application
of the ruling of the Court in the former, rather than in the latter.
It is also important to note that, with the amendments introduced
by A.M. No. 04-2-04-SC, which became effective on 16 August 2004, the
paragraph in Section 7, Rule 141 of the Rules of Court, pertaining specifically
to the basis for computation of docket fees for real actions was deleted.
Instead, Section 7 (1) of Rule 141, as amended, provides that "in cases
involving real property, the FAIR MARKET value of the REAL property in
litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT
ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH
IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE
PROPERTY IN LITIGATION . . ." shall be the basis for the computation of the
docket fees. Would such an amendment have an impact on Gochan,
Siapno, and Serrano? The Court rules in the negative.
A real action indisputably involves real property. The docket fees for a
real action would still be determined in accordance with the value of the real
property involved therein; the only difference is in what constitutes the
acceptable value. In computing the docket fees for cases involving real
properties, the courts, instead of relying on the assessed or estimated value,
would now be using the fair market value of the real properties (as stated in
the Tax Declaration or the Zonal Valuation of the Bureau of Internal Revenue,
whichever is higher) or, in the absence thereof, the stated value of the same.
In sum, the Court finds that the true nature of the action instituted by
petitioner against respondents is the recovery of title to and possession of real
property. It is a real action necessarily involving real property, the docket fees
for which must be computed in accordance with Section 7 (1), Rule 141 of the
Rules of Court, as amended. The Court of Appeals, therefore, did not commit
any error in affirming the RTC Orders requiring petitioner to pay additional
docket fees for its Complaint in Civil Case No. 2006-0030. TAcSaC
The Court does not give much credence to the allegation of petitioner
that if the judgment of the Court of Appeals is allowed to stand and not
rectified, it would result in grave injustice and irreparable injury to petitioner in
view of the prohibitive amount assessed against it. It is a sweeping assertion
which lacks evidentiary support. Undeniably, before the Court can conclude
that the amount of docket fees is indeed prohibitive for a party, it would have
to look into the financial capacity of said party. It baffles this Court that herein
petitioner, having the capacity to enter into multi-million transactions, now
stalls at paying P720,392.60 additional docket fees so it could champion
before the courts its rights over the disputed real properties. Moreover, even
though the Court exempts individuals, as indigent or pauper litigants, from
paying docket fees, it has never extended such an exemption to a corporate
entity.
WHEREFORE, premises considered, the instant Petition for Review is
hereby DENIED. The Decision, dated 22 November 2006, of the Court of
Appeals in CA-G.R. SP No. 94800, which affirmed the Orders dated 24 March
2006 and 29 March 2006 of the RTC, Branch 22, of Naga City, in Civil Case
No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and Realty
Development Corporation to pay additional docket/filing fees, computed
based on Section 7 (a), Rule 141 of the Rules of Court, as amended, is
hereby AFFIRMED. Costs against the petitioner. IcADSE
SO ORDERED.
(Ruby Shelter Builders and Realty Development Corporation v. Formaran III,
|||
THIRD DIVISION
DECISION
BRION, J : p
SECOND DIVISION
DECISION
DEL CASTILLO, J : p
Here, petitioners concede that payment of the full amount of docket fees within
the prescribed period is not a mere technicality of law or procedure but a
jurisdictional requirement. Nevertheless, they want this Court to relax the
application of the rule on the payment of the appeal fee in the name of
substantial justice and equity.
The Court is not persuaded.
The liberality which petitioners pray for has already been granted to them by the
CA at the outset. It may be recalled that while petitioners paid a substantial part
of the docket fees, they still failed to pay the full amount thereof since their
payment was short of P30.00. Based on the premise that the questioned
Decision of the RTC has already become final and executory due to non-
perfection, the CA could have dismissed the appeal outright. But owing to the
fact that only the meager amount of P30.00 was lacking and considering that the
CA may opt not to proceed with the case until the docket fees are paid, 40 it still
required petitioners, even if it was already beyond the reglementary period, to
complete their payment of the appeal fee within 10 days from notice. Clearly, the
CA acted conformably with the pronouncement made in Camposagrado, a case
cited by petitioners, that "[a] party's failure to pay the appellate docket fee within
the reglementary period confers only a discretionary and not a mandatory power
to dismiss the proposed appeal. Such discretionary power should be used in the
exercise of the court's sound judgment in accordance with the tenets of justice
and fair play with great deal of circumspection, considering all attendant
circumstances and must be exercised wisely and prudently, never capriciously,
with a view to substantial justice." 41
The CA's leniency over petitioners' cause did not end there. Although they were
given only 10 days to remit the P30.00 deficiency, the said court allowed an even
longer period of nine months to lapse, apparently in the hope that petitioners'
compliance would be on its way. But as no payment was remitted, it was
constrained to finally dismiss the appeal for non-perfection. Surprisingly,
petitioners were again heard of when they filed a Motion for Reconsideration to
which they attached a postal money order of P30.00. Nevertheless, they did not
offer any plausible explanation either as to why they, at the start, failed to pay the
correct docket fees or why they failed to comply with the CA's directive for them
to remit the P30.00-deficiency. Instead, they focused on begging the CA for
leniency, arguing that the meager amount of the deficiency involved justifies
relaxation of the rules. What is worse is that even if the CA already took note of
the lack of such explanation in its Resolution denying petitioners' motion for
reconsideration, petitioners, up to now, have not attempted to tender one in this
Petition and instead continue to capitalize on substantial justice, fair play and
equity to secure a reversal of the dismissal of their appeal. The Court cannot,
therefore, help but conclude that there is really no plausible reason behind the
said omission.
Suffice it to say that "[c]oncomitant to the liberal interpretation of the rules of
procedure should be an effort on the part of the party invoking liberality to
adequately explain his failure to abide by the rules." 42 Those who seek
exemption from the application of the rule have the burden of proving the
existence of exceptionally meritorious reason warranting such
departure. 43 Petitioners' failure to advance any explanation as to why they failed
to pay the correct docket fees or to complete payment of the same within the
period allowed by the CA is thus fatal to their cause. Hence, a departure from the
rule on the payment of the appeal fee is unwarranted.
Neither do the cases cited by petitioners help because they are not in point.
Unlike in this case, the CA in Camposagrado no longer required the petitioners
therein to complete the payment of the appeal fee by remitting the P5.00
deficiency but just dismissed the appeal outright. Moreover, a justifiable reason
for the insufficient payment was tendered by petitioners in the said case, i.e., that
they relied on the assessment made by the collection officer of the court and
honestly believed that the amount collected from them was that which is
mandated by the Rules.
The same thing goes true with Gutierrez. In fact, the pronouncement made
in Sun Insurance Office, Ltd. v. Asuncion, 44 as cited in Gutierrez, even militates
against petitioners. It was reiterated therein that the rule that "a court acquires
jurisdiction over any case only upon payment of the prescribed docket fees does
not apply where the party does not deliberately intend to defraud the court in
payment of docket fees, and manifests its willingness to abide by the rules by
paying additional docket fees when required by the court." 45 As may be
recalled, petitioners in this case did not immediately remit the deficient amount of
P30.00 when required by the CA and only did so after the lapse of more than
nine months when their appeal was already dismissed. SaAcHE
PHIL 515-531)
THIRD DIVISION
DECISION
PERALTA, J : p
For this Court's resolution is the Petition for Review
on Certiorari under Rule 45 of the Rules of Court, dated August 17, 2010, of
petitioner Rodging Reyes assailing the Resolution 1 dated November 23, 2009
of the Court of Appeals in CA-G.R. CR No. 00421-MIN.
The facts are the following:
Petitioner, in a complaint filed by private respondent Salud M. Gegato,
was charged with Grave Threats before the Municipal Circuit Trial
Court (MCTC) of Bayugan and Sibagat, Bayugan, Agusan del Sur, which
reads as follows:
That on or about the 16th day of October 2001, at about 5:10
o'clock in the afternoon, more or less, in the premises and vicinity,
particularly at Avon Store, situated at Atis Street, Poblacion, in the
municipality of Bayugan, province of Agusan del Sur, Philippines, and
within the jurisdiction of this Honorable Court, the above-named
Accused, with deliberate intent, moved by personal resentment and
hatred, did then and there willfully, unlawfully and feloniously
threatened the life of Mrs. Salud Gegato, speak and utter by telephone
the following threatening words, to wit; "SALUD, UNDANGA ANG
IMONG PAGSIGI UG TSISMIS SA AKONG ASAWA, KAY
MAULAWAN ANG AKONG ASAWA. WARNINGAN TAKA AYAW
PANG HILABOT SA AMONG KINABUHI KAY BASIN PATYON
TAKA," meaning (Salud, stop your rumor against my wife because she
will be embarrassed. I'm warning you, don't mind our lives for I might
kill you), which acts cast fear and danger upon the life of the victim
Salud Gegato, to the damage and prejudice consisting of actual, moral
and compensatory damages.
CONTRARY TO LAW.
Bayugan, Agusan del Sur, Philippines, October 23, 2001. 2
Before arraignment, petitioner filed a Motion to Quash based on the
ground of jurisdiction and that the crime is not Grave Threats under Article
282 of theRevised Penal Code, but Other Light Threats under Article 285,
paragraph 2 of the same Code. IAETDc
The MCTC, in its Order dated June 3, 2002, denied the motion.
Petitioner's motion for reconsideration was also denied by the same court in
an Order dated July 25, 2002.
On September 13, 2002, petitioner filed a Motion to Inhibit the presiding
judge on the ground that private respondent is the Court Interpreter of the
same court, but it was denied in the court's Order dated September 16, 2002
based on the Order of this Court dated July 3, 2002 regarding the same
motion for inhibition of the same presiding judge filed earlier by the petitioner
with this Court. Based on that Order of this Court, the basis of the inhibition
does not fall within the absolute disqualification rule under Section 1, Rule 137
of the Rules of Court,and neither does it appear to be a just or valid reason
under paragraph 2 thereof. This Court also ordered the presiding judge to set
aside the Order of Inhibition and directed the same presiding judge to hear
and decide the case with dispatch applying the Rules on Summary
Procedure. 3
The MCTC, in a Decision 4 dated August 10, 2005, found petitioner
guilty beyond reasonable doubt of the crime charged. The dispositive portion
of the Decision reads:
In view of the foregoing, this Court finds the Accused GUILTY
beyond reasonable doubt of the crime of GRAVE THREATS under
Paragraph 1 (2) imposing condition, without the offender attaining his
purpose, and is hereby sentenced to suffer imprisonment, considering
one (1) mitigating circumstance, the medium period of arresto mayor or
a period of two (2) months and one (1) day to four (4) months.
In addition, he is ordered to pay Private Complainant [the]
following civil liabilities.
a. The amount of ONE HUNDRED THOUSAND (P100,000.00)
Pesos as moral damages.
b. the amount of TWENTY THOUSAND (P20,000.00) Pesos for
litigation expenses and for Attorney's Fees as it is clear from the trials
that complainant was assisted by a Private Prosecutor for a fee.
SO ORDERED.
On appeal, the Regional Trial Court, in its Decision 5 dated April 2,
2007, denied petitioner's appeal but found petitioner guilty beyond reasonable
doubt of the crime of Other Light Threats under Article 285, par. 2 of
the Revised Penal Code, instead of Grave Threats as originally adjudged by
the MCTC. The RTC ruled that:
WHEREFORE, accused is hereby sentenced to suffer
imprisonment of 10 days of arresto menor and the moral damages of
P100,000.00 be reduced to P50,000.00, attorney's fee of P20,000.00
stands.
The original decision is hereby modified.
If accused does not file an appeal within the reglementary
period, let the entire records be returned back to the Court of origin for
proper disposition thereat. 6
Petitioner filed a Motion for Reconsideration, and in its Amended
Decision 7 dated May 16, 2007, the RTC denied the motion and modified its
original decision reducing the amount of moral damages to P10,000.00 and
the attorney's fees to P10,000.00.
Thus, petitioner filed with the Court of Appeals a Motion for Extension of
Time to File a Petition for Review. However, instead of filing a petition for
review within the 15-day period allowed by the CA, petitioner filed a second
Motion for Extension of Time asking for another 15 days within which to file
his petition for review. Afterwhich, petitioner filed his petition.
Thereafter, the CA, in its Resolution 8 dated August 2, 2007, dismissed
the petition. The Resolution partly reads, as follows:
Petitioner's first Motion for Extension of Time to File Petition for
Review asking for fifteen (15) days from June 6, 2007 or until June 21,
2007 is DENIED for failure to pay the full amount of the docket fees
pursuant to Sec. 1, Rule 42 of the Rules of Court. His second motion
for extension is likewise DENIED as no further extension may be
granted except for most compelling reason.
The petition subsequently filed is, however, NOTED but
DISMISSED on the following grounds:
1. Filed beyond the reglementary period;
2. Failure of petitioner to pay complete docket fees
as prescribed by law. It is deficient by P3,530.00;
3. Failure of petitioner to indicate a complete
statement of material dates as required under the Rules.
Petitioner did not mention in the body of the petition when
he received the RTC's Order dated May 16, 2007
denying his Motion for Reconsideration;
4. Failure of petitioner to attach pertinent
documents material in the petition. No copy of the May
16, 2007 Order denying his Motion for Reconsideration
was attached to the petition.
On August 14, 2007, petitioner filed a Motion for Reconsideration, but it
was denied by the CA in its Resolution dated October 17, 2008 for failure of
the petitioner to furnish copies to the Solicitor General and the private
respondent. DcHSEa
EN BANC
DECISION
LEONEN, J : p
Republic Act No. 8975 does not sanction splitting a cause of action in
order for a party to avail itself of the ancillary remedy of a temporary
restraining order from this court. Also, this law covers only national
government infrastructure projects. This case involves a local government
infrastructure project.
For local government infrastructure projects, Regional Trial Courts may
issue provisional injunctive reliefs against government infrastructure projects
only when (1) there are compelling and substantial constitutional violations;
(2) there clearly exists a right in esse; (3) there is a need to prevent grave and
irreparable injuries; (4) there is a demonstrable urgency to the issuance of the
injunctive relief; and (5) when there are public interest at stake in restraining
or enjoining the project while the action is pending that far outweighs (a) the
inconvenience or costs to the party to whom the project is awarded and (b)
the public benefits that will result from the completion of the project. The time
periods for the validity of temporary restraining orders issued by trial courts
should be strictly followed. No preliminary injunction should issue unless the
evidence to support the injunctive relief is clear and convincing.
We are asked by Dynamic Builders & Construction Co. (Phil.), Inc.
(Dynamic Builders) through this Petition for prohibition with application for
issuance of a temporary restraining order and/or writ of preliminary
injunction 1 that:
1. Upon the filing of this petition, a temporary restraining order
and/or writ of preliminary injunction be immediately issued restraining
and enjoining:
(a) the enforcement or execution of the 12 June 2006 Decision
and the 30 June 2006 Resolution by the Hon. Ricardo P.
Presbitero, Jr., Mayor of the Municipality of Valladolid and
Head of the Procuring Entity in Protest Case No. BPC-01-
06 entitled "Dynamic Builders & Construction Company
(Phil.), Inc. v. Bids and Awards Committee, Municipality of
Valladolid, Negros Occidental" by the respondents, or their
agents, or anyone acting in their behalf, or anyone who
stands to benefit from such order, in any manner, during
the pendency of the proceedings in Civil Case No. 1459 in
order not to render further proceedings in Civil Case No.
1459 moot and academic and any judgment in the said
case ineffectual;
(b) the implementation of the award of the Construction Shoreline
Protection Project subject of Protest Case No. BPC-01-06,
during the pendency of Civil Case No. 1459, by the
respondents, or their agents, or anyone acting in their
behalf, or anyone who stands to benefit from such
implementation, in any manner, during the pendency of the
proceedings in Civil Case No. 1459 in order not to render
further proceedings in Civil Case No. 1459 moot and any
judgment in the said case ineffectual; and
2. Thereafter, a writ of prohibition be issued and/or the
preliminary injunction be made permanent and continuing, during the
pendency of Civil Case No. 1459 before the Regional Trial Court of
Bago City.
Other reliefs just and equitable in the premises are likewise
prayed for. 2
On December 28, 2005, the Municipality of Valladolid, Negros
Occidental, through its Bids and Awards Committee, published an invitation to
bid for the construction of a 1,050-lineal-meter rubble concrete seawall along
the municipality's shoreline. 3 This infrastructure venture is known as the
"Construction Shoreline Protection Project." 4
On January 17, 2006, the Bids and Awards Committee conducted a
pre-bid conference attended by six (6) prospective contractors including
Dynamic Builders.5
On January 31, 2006, three (3) out of the seven (7) contractors that had
secured bidding documents in order to bid "submitted letters of
withdrawal." 6 Thus, only the remaining four (4) bidders "were considered
during the opening of the bids." 7 The prices offered were the following: 8
Mig-wells Const. Corp. P35,561,015.33 Highest Bidder
ADP Const. & Supply P34,778,496.72 3rd Lowest Bidder
Dynamic Builders & Const. P29,750,000.00 Lowest Bidder
HLJ Const. & Ent. P31,922,420.27 2nd Lowest Bidder
On March 27, 2006, the Bids and Awards Committee issued Resolution
No. 6 recommending the award in favor of HLJ Construction and Enterprise. 9
On April 18, 2006, the Municipality of Valladolid received its "NO
OBJECTION" letter from World Bank through the LOGOFIND 10 project
director, advising the Bids and Awards Committee to proceed with the
issuance of the notice of award, letter of acceptance, signing of contract, and
notice to proceed. 11
On April 21, 2006, the Bids and Awards Committee issued Resolution
No. 7 affirming the award of contract to HLJ Construction and Enterprise for
the construction of the 1,050-lineal-meter Construction Shoreline Protection
Project amounting to P31,922,420.37. 12
On April 25, 2006, Bids and Awards Committee Chairperson Celina C.
Segunla wrote Engr. Raul F. Balandra of Dynamic Builders and the other
participating losing bidders, ADP Construction and Mig-Wells Construction
Corporation, to inform them of the Bids and Awards Committee's findings and
decision. 13 Dynamic Builders was informed that "its bid proposal had been
found to be 'not substantially responsive.'" 14 Dynamic Builders received this
decision on May 11, 2006. 15
Dynamic Builders alleged that on May 5, 2006, it submitted the letter
dated April 7, 2006 containing a request for the Bids and Awards Committee
to furnish it with all submitted bid documents and relevant Bids and Awards
Committee resolutions, but this was denied by the letter dated May 5, 2006
invoking confidentiality under Section 2.46 of the LOGOFIND guidelines. 16
On May 15, 2006, the Bids and Awards Committee received the letter
from Dynamic Builders seeking reconsideration of the April 25, 2006 decision
declaring Dynamic Builders' bid as not substantially responsive. 17
On May 22, 2006, the Bids and Awards Committee wrote Dynamic
Builders denying the request for reconsideration. It informed Dynamic Builders
of the post-evaluation examination results showing Dynamic Builders' failure
in its Financial Contracting Capability. 18
On June 6, 2006, Dynamic Builders lodged a formal protest with the
head of the procuring entity, Mayor Ricardo P. Presbitero, Jr. (Mayor
Presbitero), to set aside the Bids and Awards Committee decision declaring
Dynamic Builders' bid as not substantially responsive. 19
Mayor Presbitero dismissed the protest in the Decision 20 dated June
12, 2006.
According to Mayor Presbitero's June 12, 2006 Decision, the bidders
underwent preliminary examination and were "subjected to the criteria of
Verification, Eligibility, Bid Security, Completeness of Bid, Substantial
Responsiveness, and Acceptance for Detailed Examination[.]" 21 Mig-wells
Construction Corporation did not pass the preliminary examination, while the
remaining three that passed were subjected to detailed examination. All three
passed and qualified for post-evaluation examination. 22
The June 12, 2006 Decision also stated that during the post-evaluation
examination, the three bidders submitted their financial statements for the last
five (5) years and other documents expressly provided in Volume 2 of the
Procurement Guidelines Manual of LOGOFIND World Bank. 23 The
examination showed that Dynamic Builders had a negative Financial
Contracting Capability of P64,579,119.13 due to numerous other contractual
commitments or balance of works. 24 HLJ Construction and Enterprise had a
positive Financial Contracting Capability of P30,921,063.86, while ADP
Construction had a positive Financial Contracting Capability of only
P12,770,893.78. 25 Section 4.5.e of the Instruction to Bidders requires a
minimum Financial Contracting Capability of P13,000,000.00. 26
Mayor Presbitero denied Dynamic Builders' Motion for Reconsideration
in the Resolution 27 dated June 30, 2006.
On September 4, 2006 and pursuant to Article XVII, Section 58
of Republic Act No. 9184, otherwise known as the Government Procurement
Reform Act, Dynamic Builders filed the Petition for Certiorari before the
Regional Trial Court of Bago City, Negros Occidental, assailing Mayor
Presbitero's Decision and Resolution. 28
Simultaneously, Dynamic Builders filed this Petition 29 dated September
4, 2006 for prohibition with application for temporary restraining order and/or
writ of preliminary injunction before this court. 30 This was received by this
court on September 6, 2006. 31
Petitioner Dynamic Builders submits that Article XVII, Section 58
of Republic Act No. 9184 implicitly allowed it to simultaneously file a Petition
for Certioraribefore the Regional Trial Court assailing the protest case on the
merits, and another Petition before this court for injunctive remedies. 32
Petitioner argues that in Section 58, the "law conferring on the Supreme
Court the sole jurisdiction to issue temporary restraining orders and
injunctions relating to Infrastructure Project of Government" refers to Republic
Act No. 8975 33 in relation to Presidential Decree No. 1818. 34 Petitioner then
submits that "whileR.A. No. 8975 appears to apply only to national
government infrastructure projects . . . the resulting amendment to P.D. No.
1818 (by virtue of Sections 3 and 9 ofR.A. No. 8975) removing any restriction
upon the Honorable Supreme Court to issue injunctive relief, would similarly
apply to the infrastructure projects . . . subject of, or covered by, P.D. No.
1818, which would include those infrastructure projects undertaken for or by
local governments." 35
Petitioner asserts that J.V. Lagon Construction v.
Pangarungan 36 clarified that Regional Trial Courts can issue injunctive relief
when it is of "extreme urgency involving a constitutional
issue." 37 Nevertheless, petitioner argues that this ruling was an obiter
dictum, and J.V. Lagon involved a national government project. 38Thus, it only
exercised prudence when it took twin remedial routes. 39
The Petition alleges that respondent HLJ Construction and Enterprise
already commenced construction and "obtained the release of the 15%
advance . . . for mobilization costs as well as partial payments for the portion .
. . completed." 40 Petitioner argues that the issuance of a temporary
restraining order and/or preliminary injunction was of extreme urgency, as it
was illegally deprived of its constitutional rights to due process and equal
protection of law. 41
The Petition then incorporates by reference its Civil Case No. 1459
Petition's discussion on the following arguments:
(1) Petitioner was denied due process when the contract was awarded to
private respondent HLJ Construction and Enterprise without first
giving the former an opportunity to avail itself of the remedies
under R.A. No. 9184[;]
(2) The award of the contract to private respondent HLJ Construction
and Enterprise violated Section 57 of R.A. No. 9184[;]
(3) Contrary to the findings of public respondents, the bid submitted by
petitioner was responsive[;] [and]
(4) For having in fact submitted the Lowest Calculated Responsive Bid,
petitioner should be awarded the contract for the Construction of
1,050 Lineal Meter Rubble Concrete Seawall of the Municipality of
Valladolid, Negros Occidental. 42
By Resolution dated September 18, 2006, this court ordered the parties
to "MAINTAIN THE STATUS QUO as of September 18, 2006 effective
immediately until further orders from the Court." 43
In their Comment 44 on the Petition, public respondents counter that
petitioner "grossly violated the rules against splitting a single cause of action,
multiplicity of suits, and forum shopping . . . [and] availed of an improper
remedy and disregarded the rule on 'hierarchy of courts[.]"' 45 The project
undertaken by HLJ Construction and Enterprise was almost near completion,
and prohibition "[was] not intended to provide a remedy for acts already
executed or accomplished." 46Petitioner should have asked for injunctive relief
in Civil Case No. 1459 filed before the trial court. 47
Public respondents argue that Article XVII, Section 58 of Republic Act
No. 9184, Presidential Decree No. 1818, and Republic Act No. 8975 do not
envision simultaneous resort to remedies before the trial court and this
court. 48 They submit that Section 58 provides for alternative remedies
between an action under Rule 65 before the Regional Trial Court and a proper
action directly before this court. 49
Public respondents agree that Republic Act No. 8975 only governs
national government projects but disagree insofar as petitioner's submission
that sinceRepublic Act No. 8975 amended Presidential Decree No. 1818 by
removing the restriction on this court to issue injunctive relief, it now covers
local government projects. 50
Respondent HLJ Construction and Enterprise similarly raises the issue
of petitioner's forum shopping. 51 It adds that due process was not denied, as
public respondent notified petitioner of its findings and decision, heard
petitioner's arguments, and entertained petitioner's motion for
reconsideration. 52 Respondent HLJ Construction and Enterprise stresses that
the Construction Shoreline Protection Project's delay will only result in grave
injustice and irreparable injury affecting the people of the Municipality of
Valladolid, Negros Occidental. 53
On December 13, 2006, petitioner filed a verified Petition to Cite
Respondents for Contempt, 54 alleging that respondents did not cease work
on the project in disregard of this court's status quo order. 55 Respondents
filed their respective comments. 56
The issues for our resolution are as follows:
First, whether Article XVII, Section 58 of Republic Act No.
9184 contemplates simultaneous filing of a petition for prohibition seeking
injunctive reliefs from this court and a petition for certiorari before the
Regional Trial Court; consequently:
a) Whether petitioner violated the rules against the splitting of a cause
of action, multiplicity of suits, and forum shopping;
b) Whether petitioner violated the doctrine on hierarchy of courts; and
c) Whether petitioner resorted to an improper remedy when it filed a
petition for prohibition with this court.
Second, whether Article XVII, Section 58 of Republic Act No. 9184, in
relation to Republic Act No. 8975 and Presidential Decree No. 1818, allows
Regional Trial Courts to issue injunctive relief subject to the presence of
certain conditions; and
Lastly, whether respondents violated this court's September 18,
2006 status quo Order in relation to the ongoing Construction Shoreline
Protection Project.
I
We proceed with the procedural issue of whether petitioner availed
itself of the wrong remedy in simultaneously filing (1) a petition
for certiorari before the trial court alleging that public respondent gravely
abused its discretion in rendering its June 12, 2006 Decision and June 30,
2006 Resolution and (2) a petition for prohibition seeking injunctive reliefs
from this court to enjoin the enforcement of public respondent's June 12, 2006
Decision and June 30, 2006 Resolution during the pendency of the case
before the trial court.
Public respondents submit that a simple reading of the Petition in Civil
Case No. 1459 readily reveals that petitioner also asked the trial court to
nullify the same Decision and Resolution on the identical ground of grave
abuse of discretion amounting to lack or excess of jurisdiction. 57
Petitioner counters that it was compelled to file the separate petitions
pursuant to, and in view of, Article XVII, Section 58 of Republic Act No.
9184: 58
Sec. 58. Report to Regular Courts; Certiorari. — Court action may be
resorted to only after the protests contemplated in this Article shall
have been completed. Cases that are filed in violation of the process
specified in this Article shall be dismissed for lack of jurisdiction. The
regional trial court shall have jurisdiction over final decisions of
the head of the procuring entity. Court actions shall be governed
by Rule 65 of the 1997 Rules of Civil Procedure.
This provision is without prejudice to any law conferring on the
Supreme Court the sole jurisdiction to issue temporary
restraining orders and injunctions relating to Infrastructure
Projects of Government. (Emphasis supplied)
Section 58 could not have envisioned a simultaneous resort to this
court by one that had already filed an action before the Regional Trial Court
without violating the basic rules on proscription against the splitting of a cause
of action, multiplicity of suits, and forum shopping.
Rule 2, Section 3 of the Rules of Court provides that "[a] party may not
institute more than one suit for a single cause of action." Moreover, Section 4
discusses the splitting of a single cause of action in that "if two or more suits
are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal
of the others." The splitting of a cause of action "violate[s] the policy against
multiplicity of suits, whose primary objective [is] to avoid unduly burdening the
dockets of the courts." 59
This Petition seeks to enjoin the execution of public respondent's
Decision and Resolution on the protest — the same Decision and Resolution
sought to be set aside in the Petition before the Regional Trial Court. In
essence, petitioner seeks the same relief through two separate Petitions filed
before separate courts. This violates the rule against forum shopping.
Rule 7, Section 5 of the Rules of Court requires the plaintiff or principal
party to certify under oath that he or she has not commenced any action
involving the same issues in any court. This court has discussed this rule
against forum shopping:
In essence, forum shopping is the practice of litigants resorting
to two different fora for the purpose of obtaining the same relief, to
increase their chances of obtaining a favorable judgment. In
determining whether forum shopping exists, it is important to consider
the vexation caused to the courts and the parties-litigants by a person
who asks appellate courts and/or administrative entities to rule on the
same related causes and/or to grant the same or substantially the
same relief, in the process creating the possibility of conflicting
decisions by the different courts or fora on the same issues. We have
ruled that forum shopping is present when, in two or more cases
pending, there is identity of (1) parties (2) rights or causes of action
and reliefs prayed for and (3) the identity of the two preceding
particulars is such that any judgment rendered in the other action, will,
regardless of which party is successful, amount to res judicata in the
action under consideration. 60
Private respondent alleges that petitioner did not even notify the
Regional Trial Court of Bago City, Negros Occidental, of its Petition filed
before this court. 61
The second paragraph of Article XVII, Section 58 of Republic Act No.
9184 simply means it does not preclude a direct filing before this court in
proper cases.
The Rules of Court provides for original concurrent jurisdiction by the
Regional Trial Court, the Court of Appeals, and this court in entertaining
petitions forcertiorari, prohibition, or mandamus. 62 However, parties must
adhere to the principle of hierarchy of courts. This was discussed in Dimson
(Manila), Inc., et al. v. Local Water Utilities Administration: 63
Clearly, the proper recourse to a court action from decisions of
the BAC, such as this one, is to file a certiorari not before the Supreme
Court but before the regional trial court which is vested by R.A. No.
9184 with jurisdiction to entertain the same. In the recent case of First
United Constructors Corporation v. Poro Point Management
Corporation, we held that while indeed the certiorari jurisdiction of the
regional trial court is concurrent with this Court's, that fact alone does
not allow an unrestricted freedom of choice of the court forum. But
since this is not an iron-clad rule and the full discretionary power to
take cognizance of and assume jurisdiction over special civil actions
for certiorari directly filed with the Court may actually be exercised by
it, it is nevertheless imperative that the Court's intervention be called
for by exceptionally compelling reasons or be warranted by the nature
of the issues involved. In other words, a direct invocation of the
Supreme Court's original jurisdiction to issue the writ will be allowed
only when there are special and important reasons clearly and
specifically set out in the petition. 64 (Citations omitted)
The hierarchy of courts must be respected. The doctrine with respect to
hierarchy of courts was designed so that this court will have more time to
focus on its constitutional tasks without the need to deal with causes that also
fall within the lower courts' competence. 65 This court acts on petitions for
extraordinary writs under Rule 65 "only when absolutely necessary or when
serious and important reasons exist to justify an exception to the policy." 66
Consistent with these rules and doctrines, the remedy contemplated by
Article XVII, Section 58 of Republic Act No. 9184 is either an action under
Rule 65 before the Regional Trial Court or the proper action filed before this
court. However, direct resort to this court can prosper only when the requisites
for direct invocation of this court's original jurisdiction are present.
II
Prohibition is a preventive remedy. This court has held that injunctive
remedies will not lie for acts already accomplished. 67
The acts sought to be enjoined in this case included the implementation
of the Construction Shoreline Protection Project awarded to private
respondent HLJ Construction and Enterprise. The project had already
commenced and had been ongoing at the time petitioner filed this case.
Moreover, the issue of whether these acts infringed on petitioner's
rights is a matter interrelated with the issues raised in the Petition before the
trial court, emphasizing the existence of the splitting of a cause of action.
In any case, this court has stressed that extraordinary writs
of certiorari, prohibition, and mandamus are "prerogative writs of equity[.]" 68 It
is within the court's sound discretion whether these writs should be granted,
and it will need to ensure that there is a clear right to the relief. 69
Prohibition is defined as "an extraordinary remedy available to compel
any tribunal, corporation, board, or person exercising judicial or ministerial
functions, to desist from further [proceeding] in an action or matter when the
proceedings in such tribunal, corporation, board or person are without or in
excess of jurisdiction or with grave abuse of discretion[.]" 70
Grave abuse of discretion will prosper as a ground for prohibition when
it is shown that "there was . . . capricious and whimsical exercise of judgment.
. . equivalent to lack of jurisdiction or that the tribunal, corporation, board or
person has exercised its power in an arbitrary or despotic manner by reason
of passion or personal hostility." 71
First, public respondent had jurisdiction to rule on the protest since it
was then head of the procuring entity. 72
Second, this court need not look into petitioner's allegation that its
Petition before the Regional Trial Court raised grounds warranting the
reversal of public respondent's Decision. 73 The merits of whether there was
grave abuse of discretion by public respondent were already subject of the
Petition before the trial court. Petitioner cannot be allowed to seek the same
relief from this court.
Rule 65 likewise requires that there be "no appeal or any . . . plain,
speedy, [or] adequate remedy in the ordinary course of law." 74 Section 3
of Republic Act No. 8975 provides for such a remedy when it gave an
exception to the general rule prohibiting lower courts from issuing provisional
injunctive relief against national government projects:
Sec. 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. — No
court, except the Supreme Court, shall issue any temporary restraining
order, preliminary injunction or preliminary mandatory injunction
against the government, or any of its subdivisions, officials or any
person or entity, whether public or private, acting under the
government's direction, to restrain, prohibit or compel the following
acts:
xxx xxx xxx
This prohibition shall apply in all cases, disputes or
controversies instituted by a private party, including but not limited to
cases filed by bidders or those claiming to have rights through such
bidders involving such contract/project. This prohibition shall not apply
when the matter is of extreme urgency involving a constitutional issue,
such that unless a temporary restraining order is issued, grave
injustice and irreparable injury will arise. The applicant shall file a bond,
in an amount to be fixed by the court, which bond shall accrue in favor
of the government if the court should finally decide that the applicant
was not entitled to the relief sought. (Emphasis supplied)
When the matter is of "extreme urgency involving a constitutional
issue," even Regional Trial Courts may grant injunctive reliefs as explained
in Republic v. Nolasco: 75
Republic Act No. 8975 definitively enjoins all courts, except the
Supreme Court, from issuing any temporary restraining order,
preliminary injunction, or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity
to restrain, prohibit or compel the bidding or awarding of a contract or
project of the national government, precisely the situation that obtains
in this case with respect to the Agno River Project. The only
exception would be if the matter is of extreme urgency involving a
constitutional issue, such that unless the temporary restraining
order is issued, grave injustice and irreparable injury will
arise. 76 (Emphasis supplied, citations omitted)
Considering that petitioner alleges that this matter is "of extreme
urgency, involving as it does the . . . constitutional right[s] to due process and
equal protection of the law," 77 it should have prayed for injunctive relief before
the trial court where its Petition for Certiorari via Rule 65 was pending,
together with a bond fixed by the court.
Mere allegation or invocation that constitutionally protected rights were
violated will not automatically result in the issuance of injunctive relief. The
plaintiff or the petitioner should discharge the burden to show a clear and
compelling breach of a constitutional provision. Violations of constitutional
provisions are easily alleged, but trial courts should scrutinize diligently and
deliberately the evidence showing the existence of facts that should support
the conclusion that a constitutional provision is clearly and convincingly
breached. In case of doubt, no injunctive relief should issue. In the proper
cases, the aggrieved party may then avail itself of special civil actions and
elevate the matter.
This court adheres to the policy behind the prohibition under Republic
Act No. 8975 and even issued Administrative Circular No. 11-
2000 entitled Re: Ban on the Issuance of Temporary Restraining Orders or
Writs of Preliminary Prohibitory or Mandatory Injunctions in Cases Involving
Government Infrastructure Projects.This circular enjoins lower court judges to
strictly comply with Republic Act No. 8975.
However, the issue here does not involve the propriety of a lower
court's issuance or non-issuance of provisional injunctive relief, but
petitioner's insistence that only this court can issue such injunctive relief in
justifying its simultaneous Petitions before the Regional Trial Court and this
court.
Petitioner hinges its erroneous simultaneous Petitions on its reading
of Republic Act No. 8975 in relation to Presidential Decree No. 1818.
III
Petitioner submits that only this court has the power to issue injunctions
to enjoin government infrastructures including those of local government. 78
Petitioner explains that the "laws" referred to in Article XVII, Section 58
of Republic Act No. 9184 refer to Republic Act No. 8975 that prohibits
courts, except the Supreme Court, from issuing temporary restraining orders
and injunctions against government infrastructure projects. It adds
that Republic Act No. 8975 must be taken in relation to Presidential Decree
No. 1818 prohibiting the issuances by the courts of restraining orders or
injunctions involving infrastructure projects. 79 The full text of Presidential
Decree No. 1818 promulgated in 1981 reads:
PRESIDENTIAL DECREE NO. 1818
PROHIBITING COURTS FROM ISSUING RESTRAINING ORDERS
OR PRELIMINARY INJUNCTIONS IN CASES INVOLVING
INFRASTRUCTURE AND NATURAL RESOURCE DEVELOPMENT
PROJECTS OF, AND PUBLIC UTILITIES OPERATED BY, THE
GOVERNMENT
WHEREAS, Presidential Decree No. 605 prohibits the issuance
by the courts of restraining orders or injunctions in cases involving
concessions, licenses, and other permits issued by administrative
officials or bodies for the exploitation, development and utilization of
natural resources of the country;
WHEREAS, it is in the public interest to adopt a similar
prohibition against the issuance of such restraining orders or
injunctions in other areas of activity equally critical to the economic
development effort of the nation, in order not to disrupt or hamper the
pursuit of essential government projects;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of
the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree and order as follows:
Section 1. No court in the Philippines shall have jurisdiction to
issue any restraining order, preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or controversy involving an
infrastructure project, or a mining, fishery, forest or other natural
resource development project of the government, or any public utility
operated by the government, including among others public utilities for
the transport of the goods or commodities, stevedoring and arrastre
contracts, to prohibit any person or persons, entity or government
official from proceeding with, or continuing the execution or
implementation of any such project, or the operation of such public
utility, or pursuing any lawful activity necessary for such execution,
implementation or operation.
Section 2. This decree shall take effect immediately. (Emphasis
supplied)
In 2000, Republic Act No. 8975 was passed. Section 3 of the law
provides:
Sec. 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. — No
court, except the Supreme Court, shall issue any temporary restraining
order, preliminary injunction or preliminary mandatory injunction
against the government or any of its subdivisions, officials or any
person or entity, whether public or private, acting under the
government's direction, to restrain, prohibit or compel the following
acts:
(a) Acquisition, clearance and development of the right-of-way
and/or site or location of any national government project;
(b) Bidding or awarding of contract/project of
the national government as defined under Section 2
hereof;
(c) Commencement, prosecution, execution, implementation,
operation of any such contract or project;
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity
necessary for such contract/project.
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter
is of extreme urgency involving a constitutional issue, such that unless
a temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be
fixed by the court, which bond shall accrue in favor of the government
if the court should finally decide that the applicant was not entitled to
the relief sought.
If after due hearing the court finds that the award of the contract is null
and void, the court may, if appropriate under the circumstances, award
the contract to the qualified and winning bidder or order a rebidding of
the same, without prejudice to any liability that the guilty party may
incur under existing laws. (Emphasis supplied)
Petitioner submits that since the repealing clause of Republic Act No.
8975 has "amended accordingly" Presidential Decree No. 1818, the
prohibition no longer extends to this court. 80 Section 9 reads:
Sec. 9. Repealing Clause. — All laws, decrees, including Presidential
Decree Nos. 605, 1818 and Republic Act No. 7160, as amended,
orders, rules and regulations or parts thereof inconsistent with this Act
are hereby repealed or amended accordingly. 81
Petitioner argues that even if Republic Act No. 8975 only
mentions national government infrastructure projects, Section 9 has
accordingly amendedPresidential Decree No. 1818, such that the projects
covered by this earlier law, like those undertaken by local governments, are
similarly covered by the removal of the prohibition against this court. 82
In other words, petitioner contends that based on these laws, only this
court can issue injunctive relief against local government infrastructure
projects. Thus, it was constrained to simultaneously file two separate Petitions
before the Regional Trial Court and this court.
We cannot agree.
There is nothing in Republic Act No. 8975 or in Presidential Decree No.
1818 that allows the simultaneous availment of legal remedies before the
Regional Trial Court and this court.
Republic Act No. 8975, even when read with Presidential Decree No.
1818, does not sanction the splitting of a cause of action in order for a party to
avail itself of the ancillary remedy of a temporary restraining order from this
court.
Petitioner's reading of Republic Act No. 8975's repealing clause, such
that only this court can issue injunctive relief, fails to persuade.
This court has set the limit on the prohibition found in Presidential
Decree No. 1818 by explaining that lower courts are not prohibited from
enjoining administrative acts when questions of law exist and the acts do not
involve administrative discretion in technical cases:
Although Presidential Decree No. 1818 prohibits any court from
issuing injunctions in cases involving infrastructure projects, the
prohibition extends only to the issuance of injunctions or restraining
orders against administrative acts in controversies involving facts or
the exercise of discretion in technical cases. On issues clearly outside
this dimension and involving questions of law, this Court declared that
courts could not be prevented from exercising their power to restrain or
prohibit administrative acts. In such cases, let the hammer fall and let it
fall hard. 83 (Emphasis supplied, citations omitted)
We also consider the second paragraph of Republic Act No. 8975,
Section 3 on the exception to the prohibition:
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter
is of extreme urgency involving a constitutional issue, such that unless
a temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be
fixed by the court, which bond shall accrue in favor of the government
if the court should finally decide that the applicant was not entitled to
the relief sought. (Emphasis supplied)
In other words, the Regional Trial Court can issue injunctive relief
against government infrastructure projects, even those undertaken by local
governments, considering that the prohibition in Section 3 of Republic Act No.
8957 only mentions national government projects. These courts can issue
injunctive relief when there are compelling constitutional violations — only
when the right is clear, there is a need to prevent grave and irreparable
injuries, and the public interest at stake in restraining or enjoining the project
while the action is pending far outweighs the inconvenience or costs to the
party to whom the project is awarded.
Republic Act No. 8975 mentions the constitutional provision in that
"[t]he use of property bears a social function, and all economic agents shall
contribute to the common good." 84
Statute cannot be interpreted as to violate protected rights. Thus, the
above conditions safeguard against lower court issuances of provisional
injunctive relief in cases not falling within the exception.
These safeguards are also consistent with the law's policy for the
expeditious implementation of government projects that ultimately benefit the
public:
Section 1. Declaration of Policy. — Article XII, Section 6 of the
Constitution states that the use of property bears a social function, and
all economic agents shall contribute to the common good. Towards this
end, the State shall ensure the expeditious and efficient
implementation and completion of government infrastructure
projects to avoid unnecessary increase in construction, maintenance
and/or repair costs and to immediately enjoy the social and economic
benefits therefrom. 85(Emphasis supplied)
There is no need for this court to labor on petitioner's arguments
regarding violations of due process and equal protection of the law and the
alleged grave injustice and irreparable injury petitioner suffered. The Petition's
incorporation of its discussion on these arguments, as made in its Petition
before the Regional Trial Court docketed as Civil Case No. 1459, only
emphasizes the splitting of a cause of action committed.
In any event, the general rule of prohibition under Republic Act No.
8975 does not preclude lower courts from assuming jurisdiction when the
ultimate relief prayed for is to nullify a national government infrastructure
project and its implementation:
However, it must be clarified that Republic Act No. 8975 does
not ordinarily warrant the outright dismissal of any complaint or petition
before the lower courts seeking permanent injunctive relief from the
implementation of national government infrastructure projects. What is
expressly prohibited by the statute is the issuance of the provisional
reliefs of temporary restraining orders, preliminary injunctions, and
preliminary mandatory injunctions. It does not preclude the lower
courts from assuming jurisdiction over complaints or petitions that seek
as ultimate relief the nullification or implementation of a national
government infrastructure project. A statute such as Republic Act No.
8975 cannot diminish the constitutionally mandated judicial power to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of government. Section 3 of the law in fact mandates,
thus:
If after due hearing the court finds that the award
of the contract is null and void, the court may, if
appropriate under the circumstances, award the contract
to the qualified and winning bidder or order a rebidding of
the same, without prejudice to any liability that the guilty
party may incur under existing laws.
Thus, when a court is called upon to rule on an initiatory
pleading assailing any material aspect pertinent to a national
government infrastructure project, the court ordinarily may not dismiss
the action based solely on Republic Act No. 8975 but is merely
enjoined from granting provisional reliefs. If no other ground obtains to
dismiss the action, the court should decide the case on the
merits. 86 (Emphasis supplied, citation omitted)
IV
We decide on petitioner's verified Petition to Cite Respondent for
Contempt alleging violation of this court's September 18, 2006 status
quo Order.
In its Comment, private respondent HLJ Construction and Enterprise
explains that it has no intention to disobey the Resolution. Its decision to
continue the Construction Shoreline Protection Project was based on the
definition of "status quo," meaning the "present, current, existing state of
affairs." 87
"The present[,] existing condition on September 18, 2006, was the
ongoing construction." 88 Moreover, petitioner's rights were not violated as its
bid was declared as "not substantially responsive." 89 In the absence of a
clear legal right, no injunction can be granted. 90
Similarly, public respondent contends in its Comment that the
Construction Shoreline Protection Project commenced as early as May 8,
2006. 91 At the time the Petition was filed in September 2006, the
Construction Shoreline Protection Project had been ongoing for four (4)
months. 92 Thus, the status quo as of the September 18, 2006 Resolution was
that the project was ongoing. 93
This court has explained that status quo should be the one existing at
the time of the filing of the case:
The status quo should be that existing at the time of the filing of
the case. The status quo usually preserved by a preliminary injunction
is the last actual, peaceable and uncontested status which preceded
the actual controversy. The status quo ante litem is, ineluctably, the
state of affairs which is existing at the time of the filing of the case.
Indubitably, the trial court must not make use of its injunctive power to
alter such status. 94 (Emphasis supplied, citations omitted)
The ordinary meaning of status quo is "the existing state of
affairs[,]" 95 while status quo ante refers to "the state of affairs that
existed previously." 96
Relying in good faith on the ordinary meaning of status quo as
differentiated from status quo ante, respondents pushed through with the
construction, which had been the existing state of affairs at the time the
September 18, 2006 Resolution was issued.
This is consistent with Republic Act No. 8975's policy that "the State
shall ensure the expeditious and efficient implementation and completion of
government infrastructure projects to avoid unnecessary increase in
construction, maintenance and/or repair costs and to immediately enjoy the
social and economic benefits therefrom." 97 This policy declaration does not
distinguish between national and local government infrastructure projects.
Delay in the project will only mean additional costs for the government and
prejudice to the people of the Municipality of Valladolid who will directly
benefit from the Construction Shoreline Protection Project.
WHEREFORE, considering the foregoing, the Petition
is DISMISSED for lack of merit. The verified Petition to Cite Respondents for
Contempt dated December 11, 2006 is likewise DISMISSED for lack of merit.
SO ORDERED.
(Dynamic Builders & Construction Co. (Phil.), Inc. v. Presbitero, Jr., G.R. No.
|||
Cases:
1. Relucio vs. Lopez, G.R. No. 138497
FIRST DIVISION
Roco Buñag Kapunan & Migallos, R. T. Capulong & Associates and Benitez
Parlade Africa & Barinaga Law Office for petitioner.
Abello Concepcion Regala & Cruz for private respondent.
SYNOPSIS
Respondent Angelina Lopez filed a petition for Appointment as Sole
Administratrix of Conjugal Partnership of Properties, Forfeiture, etc. against
Alberto Lopez and petitioner Imelda Relucio. Allegedly, when Alberto abandoned
his legal wife Angelina and their children, Alberto maintained an illicit relationship
with Imelda and used the conjugal property of Angelina and Alberto in amassing
properties. Angelina and her children, however, never benefited from the same.
The issue is whether Angelina has a cause of action against Imelda. The Court
ruled in the negative. The causes of the action here are for the judicial
appointment of Angelina as administratrix of the conjugal partnership arising from
her marriage to Alberto; for the accounting of the conjugal partnership; for the
forfeiture of Alberto's share in the co-owned property acquired during his illicit
relationship with Imelda; for support and moral damages. To all these, Imelda is
a complete stranger. The administration of the property of the marriage is entirely
between the spouses, to the exclusion of all other persons. Hence, the cause of
action pertains only to Alberto. Imelda is not a real party in interest, neither can
she be an indispensable party, nor a necessary party in the petition filed by
Angelina.
SYLLABUS
DECISION
PARDO, J : p
The Case
The case is a petition for review on certiorari 1 seeking to set aside the
decision 2 of the Court of Appeals that denied a petition for certiorari assailing the
trial court's order denying petitioner's motion to dismiss the case against her
inclusion as party defendant therein.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"On September 15, 1993, herein private respondent Angelina Mejia
Lopez (plaintiff below) filed a petition for "APPOINTMENT AS SOLE
ADMINISTRATRIX OF CONJUGAL PARTNERSHIP OF PROPERTIES,
FORFEITURE, ETC.," against defendant Alberto Lopez and petitioner
Imelda Relucio, docketed as Spec. Proc. M-3630, in the Regional Trial
Court of Makati, Branch 141. In the petition, private-respondent alleged
that sometime in 1968, defendant Lopez, who is legally married to the
private respondent, abandoned the latter and their four legitimate
children; that he arrogated unto himself full and exclusive control and
administration of the conjugal properties, spending and using the same
for his sole gain and benefit to the total exclusion of the private
respondent and their four children; that defendant Lopez, after
abandoning his family, maintained an illicit relationship and cohabited
with herein petitioner since 1976.
"It was further alleged that defendant Lopez and petitioner Relucio,
during their period of cohabitation since 1976, have amassed a fortune
consisting mainly of stockholdings in Lopez-owned or controlled
corporations, residential, agricultural, commercial lots, houses,
apartments and buildings, cars and other motor vehicles, bank accounts
and jewelry. These properties, which are in the names of defendant
Lopez and petitioner Relucio singly or jointly or their dummies and
proxies, have been acquired principally if not solely through the actual
contribution of money, property and industry of defendant Lopez with
minimal, if not nil, actual contribution from petitioner Relucio.
"In order to avoid defendant Lopez obligations as a father and husband,
he excluded the private respondent and their four children from sharing
or benefiting from the conjugal properties and the income or fruits there
from. As such, defendant Lopez either did not place them in his name or
otherwise removed, transferred, stashed away or concealed them from
the private-respondent. He placed substantial portions of these conjugal
properties in the name of petitioner Relucio.
"It was also averred that in the past twenty five years since defendant
Lopez abandoned the private-respondent, he has sold, disposed of,
alienated, transferred, assigned, canceled, removed or stashed away
properties, assets and income belonging to the conjugal partnership with
the private-respondent and either spent the proceeds thereof for his sole
benefit and that of petitioner Relucio and their two illegitimate children or
permanently and fraudulently placed them beyond the reach of the
private-respondent and their four children.
"On December 8, 1993, a Motion to Dismiss the Petition was filed by
herein petitioner on the ground that private respondent has no cause of
action against her.
"An Order dated February 10, 1994 was issued by herein respondent
Judge denying petitioner Relucio's Motion to Dismiss on the ground the
she is impleaded as a necessary or indispensable party because some
of the subject properties are registered in her name and defendant
Lopez, or solely in her name.
"Subsequently thereafter, petitioner Relucio filed a Motion for
Reconsideration to the Order of the respondent Judge dated February
10, 1994 but the same was likewise denied in the Order dated May 31,
1994." 3
On June 21, 1994, petitioner filed with the Court of Appeals a petition
for certiorari assailing the trial court's denial of her motion to dismiss. 4
On May 31, 1996, the Court of Appeals promulgated a decision denying the
petition. 5 On June 26, 1996, petitioner filed a motion for
reconsideration. 6 However, on April 6, 1999, the Court of Appeals denied
petitioner's motion for reconsideration. 7
Hence, this appeal. 8
The Issues
1. Whether respondent's petition for appointment as sole
administratrix of the conjugal property, accounting, etc.
against her husband Alberto J. Lopez established a cause of
action against petitioner.
2. Whether petitioner's inclusion as party defendant is essential in
the proceedings for a complete adjudication of the
controversy. 9
The Court's Ruling
We grant the petition. We resolve the issues in seriatim.
First issue: whether a cause of action exists against petitioner in the proceedings
below. "A cause of action is an act or omission of one party the defendant in
violation of the legal right of the other." 10 The elements of a cause of action are:
(1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created;
(2) an obligation on the part of the named defendant to respect or
not to violate such right; and
(3) an act or omission on the part of such defendant in violation of
the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages. 11
A cause of action is sufficient if a valid judgment may be rendered thereon if the
alleged facts were admitted or approved. 12
In order to sustain a motion to dismiss for lack of cause of action, the complaint
must show that the claim for relief does not exist, rather than that a claim has
been merely defectively stated or is ambiguous, indefinite or uncertain. 13
Hence, to determine the sufficiency of the cause of action alleged in Special
Proceedings M-3630, we assay its allegations.
In Part Two on the "Nature of [the] Complaint," respondent Angelina Mejia Lopez
summarized the causes of action alleged in the complaint below.
The complaint is by an aggrieved wife against her husband.
Nowhere in the allegations does it appear that relief is sought against petitioner.
Respondent's causes of action were all against her husband.
The first cause of action is for judicial appointment of respondent as
administratrix of the conjugal partnership or absolute community property arising
from her marriage to Alberto J. Lopez. Petitioner is a complete stranger to this
cause of action. Article 128 of the Family Code refers only to spouses, to wit: cSTHAC
"If a spouse without just cause abandons the other or fails to comply with
his or her obligations to the family, the aggrieved spouse may petition
the court for receivership, for judicial separation of property, or for
authority to be the sole administrator of the conjugal partnership property
. . ."
The administration of the property of the marriage is entirely between them, to
the exclusion of all other persons. Respondent alleges that Alberto J. Lopez is
her husband. Therefore, her first cause of action is against Alberto J. Lopez.
There is no right-duty relation between petitioner and respondent that can
possibly support a cause of action. In fact, none of the three elements of a cause
of action exists.
The second cause of action is for an accounting "by respondent husband." 14 The
accounting of conjugal partnership arises from or is an incident of marriage.
Petitioner has nothing to do with the marriage between respondent Alberto J.
Lopez. Hence, no cause of action can exist against petitioner on this ground.
Respondent's alternative cause of action is for forfeiture of Alberto J. Lopez'
share in the co-owned property "acquired during his illicit relationship and
cohabitation with [petitioner]" 15 and for the "dissolution of the conjugal
partnership of gains between him [Alberto J. Lopez] and the [respondent]."
The third cause of action is essentially for forfeiture of Alberto J. Lopez' share in
property co-owned by him and petitioner. It does not involve the issue of validity
of the co-ownership between Alberto J. Lopez and petitioner. The issue is
whether there is basis in law to forfeit Alberto J. Lopez' share, if any there be, in
property co-owned by him with petitioner.
Respondent's asserted right to forfeit extends to Alberto J. Lopez' share alone.
Failure of Alberto J. Lopez to surrender such share, assuming the trial court finds
in respondent's favor, results in a breach of an obligation to respondent and gives
rise to a cause of action. 16 Such cause of action, however, pertains to Alberto J.
Lopez, not petitioner.
The respondent also sought support. Support cannot be compelled from a
stranger.
The action in Special Proceedings M-3630 is, to use respondent Angelina M.
Lopez' own words, one by "an aggrieved wife against her
husband." 17 References to petitioner in the common and specific allegations of
the fact in the complaint are merely incidental, to set forth facts and
circumstances that prove the causes of action alleged against Alberto J. Lopez.
Finally, as to the moral damages, respondent's claim for moral damages is
against Alberto J. Lopez, not petitioner.
To sustain a cause of action for moral damages, the complaint must have the
character of an action for interference with marital or family relations under the
Civil Code.
A real party in interest is one who stands "to be benefited or injured by the
judgment of the suit." 18 In this case, petitioner would not be affected by any
judgment in Special Proceedings M-3630.
If petitioner is not a real party in interest, she cannot be an indispensable party.
An indispensable party is one without whom there can be no final determination
of an action. 19 Petitioner's participation in Special Proceedings M-3630 is not
indispensable. Certainly, the trial court can issue a judgment ordering Alberto J.
Lopez to make an accounting of his conjugal partnership with respondent, and
give support to respondent and their children, and dissolve Alberto J. Lopez'
conjugal partnership with respondent, and forfeit Alberto J. Lopez' share in
property co-owned by him and petitioner. Such judgment would be perfectly valid
and enforceable against Alberto J. Lopez.
Nor can petitioner be a necessary party in Special Proceedings M-3630.
A necessary party is one who is not indispensable but who ought to be joined as
party if complete relief is to be accorded those already parties, or for a complete
determination or settlement of the claim subject of the action. 20 In the context of
her petition in the lower court, respondent would be accorded complete relief if
Alberto J. Lopez were ordered to account for his alleged conjugal partnership
property with respondent, give support to respondent and her children, turn over
his share in the co-ownership with petitioner and dissolve his conjugal
partnership or absolute community property with respondent.
The Judgment
WHEREFORE, the Court GRANTS the petition and REVERSES the decision of
the Court of Appeals. 21 The Court DISMISSES Special Proceedings M-3630 of
the Regional Trial Court, Makati Branch 141 as against petitioner. cHDAIS
No costs.
SO ORDERED.
||| (Relucio v. Lopez, G.R. No. 138497, [January 16, 2002], 424 PHIL 617-627)
THIRD DIVISION
[G.R. No. 115838. July 18, 2002.]
SYNOPSIS
Petitioners Constante and Corazon Amor de Castro were co-owners of four lots
located in Cubao, Quezon City. In a letter dated January 24, 1984, they
authorized respondent Francisco Artigo to act as real estate broker in the sale of
these properties for the amount of P23,000,000.00 at a 5% commission. It was
private respondent who first found Times Transit Corporation as a prospective
buyer of two lots. Sometime in May 1985, the sale was consummated. Artigo
received P48,893.76 as commission. However, he felt aggrieved because
according to him, his total commission should be P352,500.00 which is 5% of the
agreed price of P7,050,000. Thus, he sued the petitioners in order to collect the
unpaid balance of his broker's commission. Petitioners, on the other hand,
argued that private respondent was selfishly asking more than what he truly
deserved as commission to the prejudice of other agents who were more
instrumental in the consummation of the sale. The trial court ruled in favor of
private respondent and it was affirmed in toto by the Court of Appeals. Hence,
this petition.
The petition was bereft of merit. A contract of agency which is not contrary to law,
public order, public policy, morals or good custom is a valid contract, and
constitutes the law between the parties. The contract of agency entered into by
Constante with Artigo was the law between them and both were bound to comply
with its terms and conditions in good faith. The mere fact that "other agents"
intervened in the consummation of the sale and were paid their respective
commissions cannot vary the terms of the contract of agency. In any event, the
Court found that the 5% real estate broker's commission was reasonable and
within the standard practice in the real estate industry for transactions of this
nature.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; INDISPENSABLE PARTY;
ELUCIDATED. — An indispensable party is one whose interest will be affected
by the court's action in the litigation, and without whom no final determination of
the case can be had. The joinder of indispensable parties is mandatory and
courts cannot proceed without their presence. Whenever it appears to the court
in the course of a proceeding that an indispensable party has not been joined, it
is the duty of the court to stop the trial and order the inclusion of such party.
2. ID.; ID.; MANDATORY JOINDER OF INDISPENSABLE PARTIES; NOT
APPLICABLE IN CASE AT BAR. — [T]he rule on mandatory joinder of
indispensable parties is not applicable to the instant case. There is no dispute
that Constante appointed Artigo in a handwritten note dated January 24, 1984 to
sell the properties of the De Castros for P23 million at a 5 percent commission.
The authority was on a first come, first serve basis. . . . Constante signed the
note as owner and as representative of the other co-owners. Under this note, a
contract of agency was clearly constituted between Constante and Artigo.
Whether Constante appointed Artigo as agent, in Constante's individual or
representative capacity, or both, the De Castros cannot seek the dismissal of the
case for failure to implead the other co-owners as indispensable parties. The De
Castros admit that the other co-owners are solidarily liable under the contract of
agency, citing Article 1915 of the Civil Code, which reads: "Art. 1915. If two or
more persons have appointed an agent for a common transaction or undertaking,
they shall be solidarily liable to the agent for all the consequences of the agency."
3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; AGENCY; AGENT MAY
RECOVER THE WHOLE COMPENSATION FROM ANY ONE OF THE CO-
PRINCIPALS. — The solidary liability of the four co-owners, however, militates
against the De Castros' theory that the other co-owners should be impleaded as
indispensable parties. A noted commentator explained Article 1915 thus — "The
rule in this article applies even when the appointments were made by the
principals in separate acts, provided that they are for the same transaction. The
solidarity arises from the common interest of the principals, and not from the act
of constituting the agency. By virtue of this solidarity, the agent can recover from
any principal the whole compensation and indemnity owing to him by the others.
The parties, however, may, by express agreement, negate this solidary
responsibility. The solidarity does not disappear by the mere partition effected by
the principals after the accomplishment of the agency. If the undertaking is one in
which several are interested, but only some create the agency, only the latter are
solidarily liable, without prejudice to the effects ofnegotiorum gestio with respect
to the others. And if the power granted includes various transactions some of
which are common and others are not, only those interested in each transaction
shall be liable for it." When the law expressly provides for solidarity of the
obligation, as in the liability of co-principals in a contract of agency, each obligor
may be compelled to pay the entire obligation. The agent may recover the whole
compensation from any one of the co-principals, as in this case. Indeed, Article
1216 of the Civil Code provides that a creditor may sue any of the solidary
debtors. DaACIH
DECISION
CARPIO, J : p
The Case
Before us is a Petition for Review on Certiorari 1 seeking to annul the Decision of
the Court of Appeals 2 dated May 4, 1994 in CA-G.R. CV No. 37996, which
affirmed in toto the decision 3 of the Regional Trial Court of Quezon City, Branch
80, in Civil Case No. Q-89-2631. The trial court disposed as follows:
"WHEREFORE, the Court finds defendants Constante and Corazon
Amor de Castro jointly and solidarily liable to plaintiff the sum of:
a) P303,606.24 representing unpaid commission;
b) P25,000.00 for and by way of moral damages;
c) P45,000.00 for and by way of attorney's fees;
d) To pay the cost of this suit.
Quezon City, Metro Manila, December 20, 1991."
The Antecedent Facts
On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity) sued
petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A. De
Castro ("Corazon" for brevity) to collect the unpaid balance of his broker's
commission from the De Castros. 4 The Court of Appeals summarized the facts in
this wise:
". . .. Appellants 5 were co-owners of four (4) lots located at EDSA corner
New York and Denver Streets in Cubao, Quezon City. In a letter dated
January 24, 1984 (Exhibit "A-1", p. 144, Records), appellee 6 was
authorized by appellants to act as real estate broker in the sale of these
properties for the amount of P23,000,000.00, five percent (5%) of which
will be given to the agent as commission. It was appellee who first found
Times Transit Corporation, represented by its president Mr. Rondaris, as
prospective buyer which desired to buy two (2) lots only, specifically lots
14 and 15. Eventually, sometime in May of 1985, the sale of lots 14 and
15 was consummated. Appellee received from appellants P48,893.76 as
commission.
It was then that the rift between the contending parties soon emerged.
Appellee apparently felt short changed because according to him, his
total commission should be P352,500.00 which is five percent (5%) of
the agreed price of P7,050,000.00 paid by Times Transit Corporation to
appellants for the two (2) lots, and that it was he who introduced the
buyer to appellants and unceasingly facilitated the negotiation which
ultimately led to the consummation of the sale. Hence, he sued below to
collect the balance of P303,606.24 after having received P48,893.76 in
advance.
On the other hand, appellants completely traverse appellee's claims and
essentially argue that appellee is selfishly asking for more than what he
truly deserved as commission to the prejudice of other agents who were
more instrumental in the consummation of the sale. Although appellants
readily concede that it was appellee who first introduced Times Transit
Corp. to them, appellee was not designated by them as their exclusive
real estate agent but that in fact there were more or less eighteen (18)
others whose collective efforts in the long run dwarfed those of
appellee's, considering that the first negotiation for the sale where
appellee took active participation failed and it was these other agents
who successfully brokered in the second negotiation. But despite this
and out of appellants' "pure liberality, beneficence and magnanimity",
appellee nevertheless was given the largest cut in the commission
(P48,893.76), although on the principle of quantum meruit he would
have certainly been entitled to less. So appellee should not have been
heard to complain of getting only a pittance when he actually got the
lion's share of the commission and worse, he should not have been
allowed to get the entire commission. Furthermore, the purchase price
for the two lots was only P3.6 million as appearing in the deed of sale
and not P7.05 million as alleged by appellee. Thus, even assuming that
appellee is entitled to the entire commission, he would only be getting
5% of the P3.6 million, or P180,000.00."
Ruling of the Court of Appeals
The Court of Appeals affirmed in toto the decision of the trial court.
First. The Court of Appeals found that Constante authorized Artigo to act as
agent in the sale of two lots in Cubao, Quezon City. The handwritten
authorization letter signed by Constante clearly established a contract of agency
between Constante and Artigo. Thus, Artigo sought prospective buyers and
found Times Transit Corporation ("Times Transit" for brevity). Artigo facilitated
the negotiations which eventually led to the sale of the two lots. Therefore, the
Court of Appeals decided that Artigo is entitled to the 5% commission on the
purchase price as provided in the contract of agency.
Second. The Court of Appeals ruled that Artigo's complaint is not dismissible for
failure to implead as indispensable parties the other co-owners of the two lots.
The Court of Appeals explained that it is not necessary to implead the other co-
owners since the action is exclusively based on a contract of agency between
Artigo and Constante.
Third. The Court of Appeals likewise declared that the trial court did not err in
admitting parol evidence to prove the true amount paid by Times Transit to the
De Castros for the two lots. The Court of Appeals ruled that
evidence aliunde could be presented to prove that the actual purchase price was
P7.05 million and not P3.6 million as appearing in the deed of sale.
Evidence aliunde is admissible considering that Artigo is not a party, but a mere
witness in the deed of sale between the De Castros and Times Transit. The
Court of Appeals explained that, "the rule that oral evidence is inadmissible to
vary the terms of written instruments is generally applied only in suits between
parties to the instrument and strangers to the contract are not bound by it."
Besides, Artigo was not suing under the deed of sale, but solely under the
contract of agency. Thus, the Court of Appeals upheld the trial court's finding that
the purchase price was P7.05 million and not P3.6 million.
Hence, the instant petition.
The Issues
According to petitioners, the Court of Appeals erred in —
I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR
FAILURE TO IMPLEAD INDISPENSABLE PARTIES-IN-
INTEREST;
II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE
GROUND THAT ARTIGO'S CLAIM HAS BEEN EXTINGUISHED
BY FULL PAYMENT, WAIVER, OR ABANDONMENT;
III. CONSIDERING INCOMPETENT EVIDENCE;
IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;
V. SANCTIONING AN AWARD OF MORAL DAMAGES AND
ATTORNEY'S FEES;
VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY
DAMAGES, AND ATTORNEY'S FEES.
The Court's Ruling
The petition is bereft of merit.
First Issue: whether the complaint merits dismissal for failure to implead other
co-owners as indispensable parties
The De Castros argue that Artigo's complaint should have been dismissed for
failure to implead all the co-owners of the two lots. The De Castros claim that
Artigo always knew that the two lots were co-owned by Constante and Corazon
with their other siblings Jose and Carmela whom Constante merely represented.
The De Castros contend that failure to implead such indispensable parties is fatal
to the complaint since Artigo, as agent of all the four co-owners, would be paid
with funds co-owned by the four co-owners.
The De Castros' contentions are devoid of legal basis.
An indispensable party is one whose interest will be affected by the court's action
in the litigation, and without whom no final determination of the case can be
had. 7The joinder of indispensable parties is mandatory and courts cannot
proceed without their presence. 8 Whenever it appears to the court in the course
of a proceeding that an indispensable party has not been joined, it is the duty of
the court to stop the trial and order the inclusion of such party. 9
However, the rule on mandatory joinder of indispensable parties is not applicable
to the instant case.
There is no dispute that Constante appointed Artigo in a handwritten note dated
January 24, 1984 to sell the properties of the De Castros for P23 million at a 5
percent commission. The authority was on a first come, first serve basis. The
authority reads in full:
"24 Jan. 84
To Whom It May Concern:
This is to state that Mr. Francisco Artigo is authorized as our real estate
broker in connection with the sale of our property located at Edsa Corner
New York & Denver, Cubao, Quezon City.
Asking price P23,000,000.00 with
5% commission as agent's fee.
C.C. de Castro
owner & representing
co-owners
This authority is on a first-come
First serve basis – CAC"
Constante signed the note as owner and as representative of the other co-
owners. Under this note, a contract of agency was clearly constituted between
Constante and Artigo. Whether Constante appointed Artigo as agent, in
Constante's individual or representative capacity, or both, the De Castros cannot
seek the dismissal of the case for failure to implead the other co-owners as
indispensable parties. The De Castros admit that the other co-owners are
solidarily liable under the contract of agency, 10 citing Article 1915 of the Civil
Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common
transaction or undertaking, they shall be solidarily liable to the agent for
all the consequences of the agency.
The solidary liability of the four co-owners, however, militates against the De
Castros' theory that the other co-owners should be impleaded as
indispensable parties. A noted commentator explained Article 1915 thus —
"The rule in this article applies even when the appointments were made
by the principals in separate acts, provided that they are for the same
transaction. The solidarity arises from the common interest of the
principals, and not from the act of constituting the agency. By virtue of
this solidarity, the agent can recover from any principal the whole
compensation and indemnity owing to him by the others. The parties,
however, may, by express agreement, negate this solidary responsibility.
The solidarity does not disappear by the mere partition effected by the
principals after the accomplishment of the agency.
If the undertaking is one in which several are interested, but only some
create the agency, only the latter are solidarily liable, without prejudice to
the effects ofnegotiorum gestio with respect to the others. And if the
power granted includes various transactions some of which are common
and others are not, only those interested in each transaction shall be
liable for it." 11
When the law expressly provides for solidarity of the obligation, as in the liability
of co-principals in a contract of agency, each obligor may be compelled to pay
the entire obligation. 12 The agent may recover the whole compensation from any
one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the
solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand made
against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has not
been fully collected.
Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co.,
Inc. 13 that —
". . . solidarity does not make a solidary obligor an indispensable party in
a suit filed by the creditor. Article 1216 of the Civil Code says that the
creditor 'may proceed against anyone of the solidary debtors or some or
all of them simultaneously.'" (Emphasis supplied)
Second Issue: whether Artigo's claim has been extinguished by full payment,
waiver or abandonment
The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo
was given "his proportionate share and no longer entitled to any balance."
According to them, Artigo was just one of the agents involved in the sale and
entitled to a "proportionate share" in the commission. They assert that Artigo did
absolutely nothing during the second negotiation but to sign as a witness in the
deed of sale. He did not even prepare the documents for the transaction as an
active real estate broker usually does.
The De Castros' arguments are flimsy.
A contract of agency which is not contrary to law, public order, public policy,
morals or good custom is a valid contract, and constitutes the law between the
parties. 14The contract of agency entered into by Constante with Artigo is the law
between them and both are bound to comply with its terms and conditions in
good faith.
The mere fact that "other agents" intervened in the consummation of the sale and
were paid their respective commissions cannot vary the terms of the contract of
agency granting Artigo a 5 percent commission based on the selling price. These
"other agents" turned out to be employees of Times Transit, the buyer Artigo
introduced to the De Castros. This prompted the trial court to observe:
"The alleged 'second group' of agents came into the picture only during
the so-called 'second negotiation' and it is amusing to note that these
(sic) second group, prominent among whom are Atty. Del Castillo and
Ms. Prudencio, happened to be employees of Times Transit, the buyer
of the properties. And their efforts were limited to convincing Constante
to 'part away' with the properties because the redemption period of the
foreclosed properties is around the corner, so to speak. (tsn, June 6,
1991).
xxx xxx xxx
To accept Constante's version of the story is to open the floodgates of
fraud and deceit. A seller could always pretend rejection of the offer and
wait for sometime for others to renew it who are much willing to accept a
commission far less than the original broker. The immorality in the
instant case easily presents itself if one has to consider that the alleged
'second group' are the employees of the buyer, Times Transit and they
have not bettered the offer secured by Mr. Artigo for P7 million.
It is to be noted also that while Constante was too particular about the
unrenewed real estate broker's license of Mr. Artigo, he did not bother at
all to inquire as to the licenses of Prudencio and Castillo. (tsn, April 11,
1991, pp. 39-40)." 15 (Emphasis supplied)
In any event, we find that the 5 percent real estate broker's commission is
reasonable and within the standard practice in the real estate industry for
transactions of this nature.
The De Castros also contend that Artigo's inaction as well as failure to protest
estops him from recovering more than what was actually paid him. The De
Castros cite Article 1235 of the Civil Code which reads:
Art. 1235. When the obligee accepts the performance, knowing its
incompleteness and irregularity, and without expressing any protest or
objection, the obligation is deemed fully complied with.
The De Castros' reliance on Article 1235 of the Civil Code is misplaced.
Artigo's acceptance of partial payment of his commission neither amounts to a
waiver of the balance nor puts him in estoppel. This is the import of Article
1235 which was explained in this wise:
"The word accept, as used in Article 1235 of the Civil Code, means to
take as satisfactory or sufficient, or agree to an incomplete or irregular
performance. Hence, the mere receipt of a partial payment is not
equivalent to the required acceptance of performance as would
extinguish the whole obligation." 16 (Emphasis supplied)
There is thus a clear distinction between acceptance and mere receipt. In this
case, it is evident that Artigo merely received the partial payment without waiving
the balance. Thus, there is no estoppel to speak of.
The De Castros further argue that laches should apply because Artigo did not file
his complaint in court until May 29, 1989, or almost four years later. Hence,
Artigo's claim for the balance of his commission is barred by laches.
Laches means the failure or neglect, for an unreasonable and unexplained length
of time, to do that which by exercising due diligence could or should have been
done earlier. It is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. 17
Artigo disputes the claim that he neglected to assert his rights. He was appointed
as agent on January 24, 1984. The two lots were finally sold in June 1985. As
found by the trial court, Artigo demanded in April and July of 1985 the payment of
his commission by Constante on the basis of the selling price of P7.05 million but
there was no response from Constante. 18 After it became clear that his demands
for payment have fallen on deaf ears, Artigo decided to sue on May 29, 1989.
Actions upon a written contract, such as a contract of agency, must be brought
within ten years from the time the right of action accrues. 19 The right of action
accrues from the moment the breach of right or duty occurs. From this moment,
the creditor can institute the action even as the ten-year prescriptive period
begins to run. 20
The De Castros admit that Artigo's claim was filed within the ten-year prescriptive
period. The De Castros, however, still maintain that Artigo's cause of action is
barred by laches. Laches does not apply because only four years had lapsed
from the time of the sale in June 1985. Artigo made a demand in July 1985 and
filed the action in court on May 29, 1989, well within the ten-year prescriptive
period. This does not constitute an unreasonable delay in asserting one's right.
The Court has ruled, "a delay within the prescriptive period is sanctioned by law
and is not considered to be a delay that would bar relief." 21 In explaining that
laches applies only in the absence of a statutory prescriptive period, the Court
has stated —
"Laches is recourse in equity. Equity, however, is applied only in the
absence, never in contravention, of statutory law. Thus, laches, cannot,
as a rule, be used to abate a collection suit filed within the prescriptive
period mandated by the Civil Code." 22
Clearly, the De Castros' defense of laches finds no support in law, equity or
jurisprudence.
Third issue: whether the determination of the purchase price was made in
violation of the Rules on Evidence
The De Castros want the Court to re-examine the probative value of the evidence
adduced in the trial court to determine whether the actual selling price of the two
lots was P7.05 million and not P3.6 million. The De Castros contend that it is
erroneous to base the 5 percent commission on a purchase price of P7.05 million
as ordered by the trial court and the appellate court. The De Castros insist that
the purchase price is P3.6 million as expressly stated in the deed of sale, the due
execution and authenticity of which was admitted during the trial.
The De Castros believe that the trial and appellate courts committed a mistake in
considering incompetent evidence and disregarding the best evidence and parole
evidence rules. They claim that the Court of Appeals erroneously affirmed sub
silentio the trial court's reliance on the various correspondences between
Constante and Times Transit which were mere photocopies that do not satisfy
the best evidence rule. Further, these letters covered only the first negotiations
between Constante and Times Transit which failed; hence, these are immaterial
in determining the final purchase price.
The De Castros further argue that if there was an undervaluation, Artigo who
signed as witness benefited therefrom, and being equally guilty, should be left
where he presently stands. They likewise claim that the Court of Appeals erred in
relying on evidence which were not offered for the purpose considered by the
trial court. Specifically, Exhibits "B", "C", "D" and "E" were not offered to prove
that the purchase price was P7.05 Million. Finally, they argue that the courts a
quo erred in giving credence to the perjured testimony of Artigo. They want the
entire testimony of Artigo rejected as a falsehood because he was lying when he
claimed at the outset that he was a licensed real estate broker when he was not.
Whether the actual purchase price was P7.05 Million as found by the trial court
and affirmed by the Court of Appeals, or P3.6 Million as claimed by the De
Castros, is a question of fact and not of law. Inevitably, this calls for an inquiry
into the facts and evidence on record. This we can not do.
It is not the function of this Court to re-examine the evidence submitted by the
parties, or analyze or weigh the evidence again. 23 This Court is not the proper
venue to consider a factual issue as it is not a trier of facts. In petitions for review
on certiorari as a mode of appeal under Rule 45, a petitioner can only raise
questions of law. Our pronouncement in the case of Cormero vs. Court of
Appeals 24 bears reiteration:
"At the outset, it is evident from the errors assigned that the petition is
anchored on a plea to review the factual conclusion reached by the
respondent court. Such task however is foreclosed by the rule that in
petitions for certiorari as a mode of appeal, like this one, only questions
of law distinctly set forth may be raised. These questions have been
defined as those that do not call for any examination of the probative
value of the evidence presented by the parties. (Uniland Resources vs.
Development Bank of the Philippines, 200 SCRA 751 [1991]
citing Goduco vs. Court of Appeals, et al., 119 Phil. 531; Hernandez vs.
Court of Appeals, 149 SCRA 67). And when this court is asked to go
over the proof presented by the parties, and analyze, assess and weigh
them to ascertain if the trial court and the appellate court were correct in
according superior credit to this or that piece of evidence and eventually,
to the totality of the evidence of one party or the other, the court cannot
and will not do the same. (Elayda vs. Court of Appeals, 199 SCRA 349
[1991]). Thus, in the absence of any showing that the findings
complained of are totally devoid of support in the record, or that they are
so glaringly erroneous as to constitute serious abuse of discretion, such
findings must stand, for this court is not expected or required to examine
or contrast the oral and documentary evidence submitted by the parties.
(Morales vs. Court of Appeals, 197 SCRA 391 [1991] citing Santa Ana
vs. Hernandez, 18 SCRA 973 [1966])."
We find no reason to depart from this principle. The trial and appellate courts are
in a much better position to evaluate properly the evidence. Hence, we find no
other recourse but to affirm their finding on the actual purchase price.
Fourth Issue: whether award of moral damages and attorney's fees is proper
The De Castros claim that Artigo failed to prove that he is entitled to moral
damages and attorney's fees. The De Castros, however, cite no concrete reason
except to say that they are the ones entitled to damages since the case was filed
to harass and extort money from them.
Law and jurisprudence support the award of moral damages and attorney's fees
in favor of Artigo. The award of damages and attorney's fees is left to the sound
discretion of the court, and if such discretion is well exercised, as in this case, it
will not be disturbed on appeal. 25 Moral damages may be awarded when in a
breach of contract the defendant acted in bad faith, or in wanton disregard of his
contractual obligation. 26 On the other hand, attorney's fees are awarded in
instances where "the defendant acted in gross and evident bad faith in refusing
to satisfy the plaintiff's plainly valid, just and demandable claim." 27 There is no
reason to disturb the trial court's finding that "the defendants' lack of good faith
and unkind treatment of the plaintiff in refusing to give his due commission
deserve censure." This warrants the award of P25,000.00 in moral damages and
P45,000.00 in attorney's fees. The amounts are, in our view, fair and reasonable.
Having found a buyer for the two lots, Artigo had already performed his part of
the bargain under the contract of agency. The De Castros should have exercised
fairness and good judgment in dealing with Artigo by fulfilling their own part of the
bargain — paying Artigo his 5 percent broker's commission based on the actual
purchase price of the two lots.
WHEREFORE, the petition is denied for lack of merit. The Decision of the Court
of Appeals dated May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMED in
toto. CAIaHS
SO ORDERED.
(De Castro v. Court of Appeals, G.R. No. 115838, [July 18, 2002], 434 PHIL
|||
53-72)
SECOND DIVISION
SYNOPSIS
The Supreme Court granted the petition and thereby reversed and set aside the
assailed decision. The Court noted that petitioners acquired the lot before the
commencement of Civil Case No. Q-12918. They could reasonably rely on
Mariano Lising's certificate of title because at the time of purchase, it was still
free from any third party claim. As builders in good faith and innocent purchasers
for value, petitioners are proper parties in any case involving subject property.
But since private respondents failed to implead them in Civil Case No. Q-12918,
petitioners cannot be reached by the decision in said case.
SYLLABUS
DECISION
QUISUMBING, J : p
This petition for review seeks the reversal of the decision 1 of the Court of
Appeals dated January 28, 1999 in CA-G.R. SP No. 47422, which dismissed the
petition to prohibit Judge Vivencio Baclig of the Regional Trial Court of Quezon
City, Branch 77, from issuing a writ of demolition against petitioners, and the
sheriff and deputy sheriff of the same court from implementing an alias writ of
execution. Also assailed is the resolution 2 of the Court of Appeals dated
December 29, 1999 which denied petitioners' motion for reconsideration. SEDICa
For our resolution are the following issues: (1) whether the alias writ of execution
may be enforced against petitioners; and (2) whether petitioners were innocent
purchasers for value and builders in good faith.
On the first issue, petitioners claim that the alias writ of execution cannot be
enforced against them. They argue that the appellate court erred when it relied
heavily on our ruling in Vda. de Medina vs. Cruz 8 in holding that petitioners are
successors-in-interest of Mariano Lising, and as such, they can be reached by
the order of execution in Civil Case No. Q-12918 even though they were not
impleaded as parties thereto. Petitioners submit that Medina is not applicable in
this case because the circumstances therein are different from the circumstances
in the present case.
In Medina, the property in dispute was registered under Land Registration
Act No. 496 in 1916 and Original Certificate of Title No. 868 was issued in the
name of Philippine Realty Corporation (PRC). In 1949, Benedicta Mangahas and
Francisco Ramos occupied and built houses on the lot without the PRC's
consent. In 1959, PRC sold the lot to Remedios Magbanua. Mangahas and
Ramos opposed and instituted Civil Case No. C-120 to annul the sale and to
compel PRC to execute a contract of sale in their favor. The trial court dismissed
the complaint and ordered Mangahas and Ramos to vacate the lot and surrender
possession thereof to Magbanua. The judgment became final and executory.
When Magbanua had paid for the land in full, PRC executed a deed of absolute
sale in her favor and a new title was consequently issued in her name.
Magbanua then sought the execution of the judgment in Civil Case No. C-120.
This was opposed by petitioner Medina who alleged that she owned the houses
and lot subject of the dispute. She said that she bought the houses from spouses
Ricardo and Eufrocinia de Guzman, while she purchased the lot from the heirs of
the late Don Mariano San Pedro y Esteban. The latter held the land by virtue of
a Titulo de Composicion Con El Estado Num. 4136, dated April 29, 1894. In
opposing the execution, Medina argued that the trial court did not acquire
jurisdiction over her, claiming that she was not a party in Civil Case No. C-120,
thus, she could not be considered as "a person claiming under" Ramos and
Mangahas.
When Medina reached this Court, we held that the decision in Civil Case No. C-
120, which had long become final and executory, could be enforced against
petitioner even though she was not a party thereto. We found that the houses on
the subject lot were formerly owned by Mangahas and Ramos who sold them to
spouses de Guzman, who in turn sold them to Medina. Under the circumstances,
petitioner was privy to the two judgment debtors Mangahas and Ramos, and thus
Medina could be reached by the order of execution and writ of demolition issued
against the two. As to the lot under dispute, we sustained Magbanua's ownership
over it, she being the holder of a Torrens title. We declared that a Torrens title is
generally conclusive evidence of ownership of the land referred to therein, and a
strong presumption exists that a Torrens title was regularly issued and valid. A
Torrens title is incontrovertible against any informacion possessoria, or other title
existing prior to the issuance thereof not annotated on the Torrens title.
Moreover, persons dealing with property covered by a Torrens certificate of title
are not required to go beyond what appears on its face.
Medina markedly differs from the present case on major points. First, the
petitioner in Medina acquired the right over the houses and lot subject of the
dispute afterthe original action was commenced and became final and executory.
In the present case, petitioners acquired the lot before the commencement of
Civil Case No. Q-12918. Second, the right over the disputed land of the
predecessors-in-interest of the petitioner in Medina was based on a title of
doubtful authenticity, allegedly aTitulo de Composicion Con El Estado issued by
the Spanish Government in favor of one Don Mariano San Pedro y Esteban,
while the right over the land of the predecessors-in-interest of herein petitioners
is based on a fully recognized Torrens title. Third, petitioners in this case
acquired the registered title in their own names, while the petitioner
in Medina merely relied on the title of her predecessor-in-interest and tax
declarations to prove her alleged ownership of the land.
We must stress that where a case like the present one involves a sale of a parcel
of land under the Torrens system, the applicable rule is that a person dealing
with the registered property need not go beyond the certificate of title; he can rely
solely on the title and he is charged with notice only of such burdens and claims
as are annotated on the title. 9 It is our view here that the petitioners, spouses
Victor and Honorata Orquiola, are fully entitled to the legal protection of their lot
by the Torrens system, unlike the petitioner in the Medina case who merely relied
on a mere Titulo de Composicion.
Coming now to the second issue, were petitioners purchasers in good faith and
for value? A buyer in good faith is one who buys the property of another without
notice that some other person has a right to or interest in such property. He is a
buyer for value if he pays a full and fair price at the time of the purchase or
before he has notice of the claim or interest of some other person in the
property. 10 The determination of whether one is a buyer in good faith is a factual
issue which generally is outside the province of this Court to determine in a
petition for review. An exception is when the Court of Appeals failed to take into
account certain relevant facts which, if properly considered, would justify a
different conclusion. 11 The instant case is covered by this exception to the
general rule. As found by the Court of Appeals and not refuted by private
respondent, petitioners purchased the subject land in 1964 from Mariano
Lising. 12 Civil Case No. Q-12918 was commenced sometime in 1969. The Court
of Appeals overlooked the fact that the purchase of the land took place prior to
the institution of Civil Case No. Q-12918. In other words, the sale to petitioners
was made before Pura Kalaw Ledesma claimed the lot. Petitioners could
reasonably rely on Mariano Lising's Certificate of Title which at the time of
purchase was still free from any third party claim. Hence, considering the
circumstances of this case, we conclude that petitioners acquired the land
subject of this dispute in good faith and for value.
The final question now is: could we consider petitioners builders in good faith?
We note that this is the first time that petitioners have raised this issue. As a
general rule, this could not be done. Fair play, justice, and due process dictate
that parties should not raise for the first time on appeal issues that they could
have raised but never did during trial and even during proceedings before the
Court of Appeals. 13 Nevertheless, we deem it proper that this issue be resolved
now, to avoid circuitous litigation and further delay in the disposition of this case.
On this score, we find that petitioners are indeed builders in good faith.
A builder in good faith is one who builds with the belief that the land he is building
on is his, and is ignorant of any defect or flaw in his title. 14 As earlier discussed,
petitioner spouses acquired the land in question without knowledge of any defect
in the title of Mariano Lising. Shortly afterwards, they built their conjugal home on
said land. It was only in 1998, when the sheriff of Quezon City tried to execute
the judgment in Civil Case No. Q-12918, that they had notice of private
respondent's adverse claim. The institution of Civil Case No. Q-12918 cannot
serve as notice of such adverse claim to petitioners since they were not
impleaded therein as parties.
As builders in good faith and innocent purchasers for value, petitioners have
rights over the subject property and hence they are proper parties in interest in
any case thereon. 15 Consequently, private respondents should have impleaded
them in Civil Case No. Q-12918. Since they failed to do so, petitioners cannot be
reached by the decision in said case. No man shall be affected by any
proceeding to which he is a stranger, and strangers to a case are not bound by
any judgment rendered by the court. In the same manner, a writ of execution can
be issued only against a party and not against one who did not have his day in
court. Only real parties in interest in an action are bound by the judgment therein
and by writs of execution and demolition issued pursuant thereto. 16 In our view,
the spouses Victor and Honorata Orquiola have valid and meritorious cause to
resist the demolition of their house on their own titled lot, which is tantamount to
a deprivation of property without due process of law. ACTaDH
323-333)
SECOND DIVISION
SYNOPSIS
Pangan Lim, Jr. and a certain Mercedes M. Oliver obtained a loan from petitioner
bank secured by a real estate mortgage on the property covered by TCT No. S-
50195 in the name of Oliver. Thereafter, respondent, claiming that she is
Mercedes M. Oliver, filed an action for annulment of mortgage and cancellation
of title with damages against petitioner bank. She alleged that she is the
registered and lawful owner of the subject property and that she did not apply for
a loan or surrender her title to petitioner bank. Petitioner moved to dismiss the
case for lack of cause of action and non-joinder of an indispensable party, the
mortgagor Oliver. The trial court, however, dismissed petitioner's motion to
dismiss. Instead of filing an answer, petitioner filed a petition for certiorari with the
Court of Appeals. On motion of respondent Oliver, the trial court declared
petitioner bank in default for failure to file an answer within the reglementary
period. Consequently. petitioner filed a supplemental petition seeking annulment
of the trial court's order of default. It argued that the special civil action
for certiorari filed in the Court of Appeals interrupted the proceedings before the
trial court, thereby staying the period for filing the answer. The Court of Appeals,
however, sustained the dismissal of petitioner's motion to dismiss ruling that Rule
6, Section 11 of the Rules of Court allows petitioner bank to file a third-party
complaint against mortgagor Oliver. Anent the default order, the appellate court
affirmed the same holding that the special civil action for certiorari did not
interrupt the period to file an answer, there being no temporary restraining order
or writ of preliminary injunction issued. Hence, this petition for review. SCHIcT
SYLLABUS
RESOLUTION
QUISUMBING, J : p
This petition for review 1 seeks the reversal of the decision dated June 1, 1998,
of the Court of Appeals in CA-G.R. SP No. 43836, dismissing China Banking
Corporation's petition for certiorari to annul the two orders of the Regional Trial
Court of Muntinlupa City, Branch 276, which earlier denied petitioner's motion to
dismiss and then declared the bank in default in Civil Case No. 96-219. The
appellate court also denied petitioner's motion for reconsideration in a resolution
dated September 30, 1998.
The facts of this case are culled from the records.
In August 1995, Pangan Lim, Jr. and a certain Mercedes M. Oliver opened a joint
account in China Banking Corporation (hereinafter Chinabank) at EDSA
Balintawak Branch. Lim introduced Oliver to the bank's branch manager as his
partner in the rice and palay trading business. Thereafter, Lim and Oliver applied
for a P17 million loan, offering as collateral a 7,782 square meter lot located in
Tunasan, Muntinlupa and covered by TCT No. S-50195 in the name of Oliver.
The bank approved the application. On November 17, 1995, Lim and Oliver
executed in favor of Chinabank a promissory note for P16,650,000, as well as a
Real Estate Mortgage on the property. The mortgage was duly registered and
annotated on the original title under the custody of the Registry of Deeds of
Makati and on the owner's duplicate copy in the bank's possession. The
mortgage document showed Mercedes Oliver's address to be No. 95 Malakas
Street, Diliman, Quezon City. For brevity, she is hereafter referred to as "Oliver
One."
On November 18, 1996, respondent claiming that she is Mercedes M. Oliver with
postal office address at No. 40 J.P. Rizal St., San Pedro, Laguna, filed an action
for annulment of mortgage and cancellation of title with damages against
Chinabank, Register of Deeds Atty. Mila G. Flores, and Deputy Register of
Deeds Atty. Ferdinand P. Ignacio. Respondent, whom we shall call as "Oliver
Two," claimed that she was the registered and lawful owner of the land subject of
the real estate mortgage; that the owner's duplicate copy of the title had always
been in her possession; and that she did not apply for a loan or surrender her
title to Chinabank. 2 She prayed that: (1) the owner's duplicate copy surrendered
to Chinabank as well as the original title with the Registry of Deeds be cancelled;
(2) the mortgage be declared null and void; and (3) the Registry of Deeds be
ordered to issue a new and clean title in her name. 3
On January 31, 1997, Chinabank moved to dismiss the case for lack of cause of
action and non-joinder of an indispensable party, the mortgagor.
On March 13, 1997, Judge Norma C. Perello issued an order denying the motion
to dismiss, stating that:
A reading of the COMPLAINT which of course is hypothetically admitted,
will show that a valid judgment can be rendered against defendant.
Plaintiff having sufficiently averred that defendants negligently failed to
ascertain the genuineness or not (sic) of the title of the land mortgaged
to it upon the claim of ownership by the mortgagors. Furthermore, the
matters alleged in the MOTION TO DISMISS are all evidentiary which
Defendants may substantiate at the appointed hours. 4
On April 7, 1997, Chinabank filed with the Court of Appeals a petition
for certiorari with prayer for the issuance of a writ of preliminary injunction and/or
restraining order to enjoin enforcement of the March 13, 1997 order and further
action on the case. The Court of Appeals directed respondent Oliver Two to file
her comment and deferred action on the prayer for the issuance of the
preliminary injunction pending submission of the comment.
On June 30, 1997, respondent Oliver Two moved to declare petitioner Chinabank
in default. She pointed out that since petitioner received the order denying the
motion to dismiss on March 21, 1997, it had only until April 7, 1997 to file its
answer to the complaint. However, until the filing of the motion for default, no
answer had been filed yet. The trial court granted the motion and declared
petitioner in default in its order dated July 17, 1997, thus:
Acting on the Motion To Declare Defendant Bank in Default, and finding
the same to be legally tenable is granted.
Accordingly, the Defendant Bank is declared in default as summons was
served on It as early as December 16, 1996, but until date they have not
filed an Answer nor any responsive pleading and instead, It filed a
Motion to Dismiss, which was denied by this Court on March 13, 1997.
The filing of a CERTIORARI to question the Orders by this Court did not
toll the period for Defendants to answer the complaint.
Therefore, the reglementary period for the filing of responsive pleading
has long expired.
Let the case be submitted for Decision based on the complaint.
It is SO ORDERED. 5
Consequently, petitioner Chinabank filed a supplemental petition on August 11,
1997, seeking annulment of the July 17, 1997 order. It argued that the special
civil action for certiorari filed in the Court of Appeals interrupted the proceedings
before the trial court, thereby staying the period for filing the answer.
On June 1, 1998, the Court of Appeals promulgated the assailed decision, finding
no grave abuse of discretion committed by the trial judge in ruling that the Rules
of Court provided the manner of impleading parties to a case and in suggesting
that petitioner file an appropriate action to bring the mortgagor within the court's
jurisdiction. The appellate court said that Rule 6, Section 11 of the Rules of Court
allows petitioner to file a third-party complaint against the mortgagor. As to the
judgment by default, the Court of Appeals said that an order denying the motion
to dismiss is interlocutory and may not be questioned through a special civil
action forcertiorari. The defendant must proceed with the case and raise the
issues in his motion to dismiss when he appeals to a higher court. In this case,
petitioner Chinabank should have filed its answer when it received the March 13,
1997 order denying the motion to dismiss. The special civil action
for certiorari with the Court of Appeals did not interrupt the period to file an
answer, there being no temporary restraining order or writ of preliminary
injunction issued.
The Court of Appeals denied petitioner's motion for reconsideration. Hence, this
petition anchored on the following grounds:
I
SEC. 11, RULE 3, OF THE 1997 RULES OF CIVIL PROCEDURE
DOES NOT APPLY WHERE THE PARTY WHO WAS NOT
IMPLEADED IS AN INDISPENSABLE PARTY; INSTEAD, SECTION 7,
RULE 3 THEREOF, APPLIES.
II
THE MORTGAGOR MERCEDES M. OLIVER IS AN INDISPENSABLE
PARTY UNDER SECTION 7, RULE 3, OF THE 1997 RULES OF CIVIL
PROCEDURE, AND MUST THEREFORE INDISPENSABLY BE
JOINED AS A PARTY-DEFENDANT.
III
RESPONDENT'S CAUSE OF ACTION IS ANCHORED ON HER CLAIM
AS THE REGISTERED AND LAWFUL OWNER OF THE PROPERTY IN
QUESTION AND THAT HER OWNER'S DUPLICATE COPY OF THE
TITLE (ANNEX "A") IS THE TRUE AND GENUINE TITLE. THUS, THE
ACTION BEFORE THE HONORABLE COURT-A-QUO IS A LAND
DISPUTE BETWEEN TWO (2) PERSONS CLAIMING OWNERSHIP. aHSTID
IV
THE ANNULMENT OF THE MORTGAGE AND THE CANCELLATION
OF ANNEXES "B" AND "C" AS PRAYED FOR IN THE COMPLAINT IN
CIVIL CASE NO. 96-219 ARE INEXTRICABLY INTERTWINED WITH
THE ISSUE OF OWNERSHIP, HENCE, THE LATTER MUST FIRST BE
RESOLVED TO DETERMINE THE FORMER.
V
THE OWNER'S DUPLICATE COPY OF THE TITLE OF MORTGAGOR
MERCEDES M. OLIVER OWNER'S DUPLICATE COPY CANNOT, IN
HER ABSENCE, BE DECLARED NULL AND VOID. CONSEQUENTLY,
INASMUCH AS THE MORTGAGE IN FAVOR OF PETITIONER IS
DEPENDENT UPON THE OWNER'S DUPLICATE COPY OF THE
MORTGAGOR, THE COMPLAINT IN CIVIL CASE NO. 96-219 CAN
NOT RESOLVE THE CONTROVERSY WITH FINALITY.
VI
THE CASE OF CHURCH OF CHRIST VS. VALLESPIN, G.R. NO.
53726, AUGUST 15, 1988, DOES NOT APPLY INASMUCH AS THE
USE OF TERM "INDISPENSABLE PARTY" IN SAID CASE WAS
LOOSELY USED AND IN TRUTH WAS INTENDED TO MEAN
"PARTIES-IN-INTEREST" AS CONTEMPLATED BY SECTION 2, RULE
3 OF THE RULES OF COURT.
VII
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
SANCTIONED THE TRIAL COURT'S ERROR IN DECLARING
DEFENDANT CBC IN DEFAULT FOR FAILURE TO FILE AN ANSWER,
NOTWITHSTANDING THE SETTLED DOCTRINE THAT WHERE AN
INDISPENSABLE PARTY IS NOT IN COURT, THE TRIAL COURT
SHOULD NOT PROCEED BUT INSTEAD SHOULD DISMISS THE
CASE.
VIII
THE DISMISSAL/WITHDRAWAL OF THE COMPLAINT AGAINST
DEFENDANTS REGISTER AND DEPUTY REGISTER OF DEEDS
NECESSARILY GIVE RISE TO, AND BOLSTERS, THE CONCLUSION
THAT THE OWNER'S DUPLICATE COPY OF TCT NO. S-50195 OF
MORTGAGOR MERCEDES M. OLIVER IS THE GENUINE AND
AUTHENTIC COPY. 6
For a clearer discussion of the issues in this controversy, we may state them as
follows:
1. Is the mortgagor who goes by the name of Mercedes M. Oliver,
herein called Oliver One, an indispensable party in Civil
Case No. 96219?
2. Should Section 7 Rule 3 of the 1997 Rules of Civil
Procedure 7 apply in this case?
3. Did the Court of Appeals err when it sustained the trial court's
declaration that petitioner was in default?
4. Were the withdrawal and consequent dismissal of the complaint
against the Registry of Deeds' officials indicative of the
authenticity of mortgagor Oliver One's copy of TCT No. S-
50195?
Petitioner Chinabank alleges that there are two owner's duplicate copies of TCT
No. S-50195 involved in this case and two persons claiming to be the real
"MERCEDES MARAVILLA OLIVER." One is the mortgagor, Oliver One. The
other is the respondent, Oliver Two. Respondent's complaint before the trial court
was one for cancellation of the transfer certificate of title in petitioner's
possession (Annex B). According to petitioner, the issue below is the
genuineness of the titles, which is intertwined with the issue of ownership. This
being the case, said the petitioner, the mortgagor Oliver One must necessarily be
impleaded for she is the registered owner under Annex "B". Petitioner argues
that mortgagor Oliver One is in a better position to defend her title. She stands to
suffer if it is declared fake. Further, petitioner claims that the validity and
enforceability of the mortgage entirely depends on the validity and authenticity of
Annex "B". The mortgage cannot be declared a nullity without the trial court
declaring Annex "B" a nullity. Hence, mortgagor Oliver One's participation in the
suit is indispensable, according to petitioner. In brief, what petitioner Chinabank
is saying is that it was indispensable for respondent Oliver Two to implead
mortgagor Oliver One in the case before the trial court. Failing to do that, the
complaint of herein respondent Oliver Two should have been dismissed.
Petitioner's contention is far from tenable. An indispensable party is a party in
interest, without whom no final determination can be had of an action. 8 It is true
that mortgagor Oliver One is a party in interest, for she will be affected by the
outcome of the case. She stands to be benefited in case the mortgage is
declared valid, or injured in case her title is declared fake. 9 However, mortgagor
Oliver One's absence from the case does not hamper the trial court in resolving
the dispute between respondent Oliver Two and petitioner. A perusal of Oliver
Two's allegations in the complaint below shows that it was for annulment of
mortgage due to petitioner's negligence in not determining the actual ownership
of the property, resulting in the mortgage's annotation on TCT No. S-50195 in the
Registry of Deeds' custody. To support said allegations, respondent Oliver Two
had to prove (1) that she is the real Mercedes M. Oliver referred to in the TCT,
and (2) that she is not the same person using that name who entered into a deed
of mortgage with the petitioner. This, respondent Oliver Two can do in her
complaint without necessarily impleading the mortgagor Oliver One. Hence,
Oliver One is not an indispensable party in the case filed by Oliver Two.
In Noceda vs. Court of Appeals, et al., 313 SCRA 504 (1999), we held that a
party is not indispensable to the suit if his interest in the controversy or subject
matter is distinct and divisible from the interest of the other parties and will not
necessarily be prejudiced by a judgment which does complete justice to the
parties in court. In this case, Chinabank has interest in the loan which, however,
is distinct and divisible from the mortgagor's interest, which involves the land
used as collateral for the loan.
Further, a declaration of the mortgage's nullity in this case will not necessarily
prejudice mortgagor Oliver One. The bank still needs to initiate proceedings to go
after the mortgagor, who in turn can raise other defenses pertinent to the two of
them. A party is also not indispensable if his presence would merely permit
complete relief between him and those already parties to the action, or will simply
avoid multiple litigation, as in the case of Chinabank and mortgagor Oliver
One. 10 The latter's participation in this case will simply enable petitioner
Chinabank to make its claim against her in this case, and hence, avoid the
institution of another action. Thus, it was the bank who should have filed a third-
party complaint or other action versus the mortgagor Oliver One.
As to the second issue, since mortgagor Oliver One is not an indispensable
party, Section 7, Rule 3 of the 1997 Rules of Civil Procedure, which requires
compulsory joinder of indispensable parties in a case, does not apply. Instead, it
is Section 11, Rule 3, that applies. 11 Non-joinder of parties is not a ground for
dismissal of an action. Parties may be added by order of the court, either on its
own initiative or on motion of the parties. 12 Hence, the Court of Appeals
committed no error when it found no abuse of discretion on the part of the trial
court for denying Chinabank's motion to dismiss and, instead, suggested that
petitioner file an appropriate action against mortgagor Oliver One. A person who
is not a party to an action may be impleaded by the defendant either on the basis
of liability to himself or on the ground of direct liability to the plaintiff. 13
Now, the third issue, did the Court of Appeals err when it sustained the trial
court's ruling that petitioner Chinabank was in default? As found by the Court of
Appeals, petitioner did not file its answer, although it received the March 13,
1997 order denying the motion to dismiss. Instead, petitioner filed a petition
for certiorari under Rule 65 of the Rules of Court. Said petition, however, does
not interrupt the course of the principal case unless a temporary restraining order
or writ of preliminary injunction is issued. 14 No such order or writ was issued in
this case. Hence, Chinabank as defendant below was properly declared in
default by the trial court, after the 15-day period to file its answer or other
responsive pleading lapsed.
Lastly, were the withdrawal and consequent dismissal of the complaint against
officials of the Registry of Deeds conclusive of the authenticity of mortgagor
Oliver One's copy of TCT No. S-50195? This is a question of fact, which is not a
proper subject for review in this petition. Here, we are limited only to questions of
law, 15 as a general rule. Petitioner failed to show that this case falls under any of
the exceptions to this rule. We need not tarry on this issue now.
WHEREFORE, the petition is DENIED for lack of merit. The assailed decision
dated June 1, 1998 and the resolution dated September 30, 1998 of the Court of
Appeals in CA-G.R. SP No. 43836 are AFFIRMED. Costs against petitioner.
SO ORDERED.
(China Banking Corp. v. Oliver, G.R. No. 135796, [October 3, 2002], 439
|||
PHIL 50-62)
SECOND DIVISION
[G.R. No. 176973. February 25, 2015.]
DECISION
MENDOZA, J : p
This is a petition for review on certiorari under Rule 45 seeking to annul and set
aside the July 31, 2006 Decision 1 and the February 23, 2007 Resolution 2 of the
Court of Appeals (CA) in CA-G.R. SP No. 80942. The said issuances modified
the July 21, 2003 Order 3 of the Regional Trial Court, Branch 200, Las Piñas
City (RTC) in Civil Case No. LP-02-0165, a case for Declaratory Relief and Sum
of Money with Damages filed by petitioner David M. David (David) against Philam
Plans, Inc. (PPI), Severo Henry G. Lobrin (Lobrin), respondent Federico M.
Paragas, Jr. (Paragas), Rodelio S. Datoy (Datay), Rizal Commercial Banking
Corporation, Parañaque Branch (RCBC), and Gerald P.S. Agarra (Agarra).
The RTC Order resolved the Motion to Admit Supplemental Complaint filed by
David and the Joint Omnibus Motion 4 filed by David, Lobrin and Datoy. In the
said Order, the RTC admitted the attached supplemental complaint and
approved the compromise agreement. 5 The questioned CA decision nullified the
approval by the RTC of the compromise agreement.
The Antecedents
Sometime in 1995, David, Paragas and Lobrin agreed to venture into a business
in Hong Kong (HK). They created Olympia International, Ltd. (Olympia) under HK
laws. Olympia had offices in HK and the Philippines. David handled the
marketing aspect of the business while Lobrin and Datoy were in charge of
operations. In late 1995, Olympia started with "selling, through catalogs,
consumer products such as appliances, furniture and electronic equipment to the
OFWs in Hong Kong, to be delivered to their addresses in the Philippines. They
coined the name Kayang-Kaya for the venture." 6
In early 1998, Olympia became the exclusive general agent in HK of PPI's pre-
need plans through the General Agency Agreement. In late 2001, Olympia
launched thePares-Pares program by which planholders would earn points with
cash equivalents for successfully enlisting new subscribers. The cash
equivalents, in turn, would be used for the payment of monthly premiums of the
planholders. PPI authorized Olympia to accept the premium payments, including
the cash equivalent of the bonus points, and to remit the same, net of
commissions, to PPI in the Philippines. The money from HK was to be remitted
through Olympia's account in RCBC. In turn, Olympia was to pay the planholders'
bonuses as well as the share of profits for the directors. 7 David was tasked to
personally remit said amounts to PPI as he was the only signatory authorized to
transact on behalf of Olympia regarding the RCBC accounts.
As Paragas alleged, the amount remitted by Olympia to RCBC from September
2001 to May 25, 2002 reached P82,978,543.00, representing the total net
earnings from the pre-need plans, 30% of which comprised the bonus points
earned by the subscribers under the Pares-Pares program. The rest was to be
distributed among the four partners.
In 2002, the state of affairs among the partners went sour upon Lobrin's
discovery that David failed to remit to PPI the 30% cash equivalent of the bonus
points.
In a meeting held on June 1, 2002 in HK, David tried to explain his side, but no
settlement was reached.
Later, Lobrin discovered that only P19,302,902.13 remained of the
P82,978,543.00 remitted from HK to the RCBC account. As the Chairperson of
Olympia's Board of Directors (BOD), he demanded the return of the entire
P82,978,543.00. ADETca
On June 17, 2002, the BOD stripped David of his position as a director. It then
informed RCBC of his removal. In another letter, it also instructed RCBC to
prohibit any transaction regarding the funds or their withdrawal therefrom
pending the determination of their rightful owner/s.
Meanwhile, a Watch-List Order was issued against David pursuant to the letter
sent by Paragas' counsel to the Bureau of Immigration. As a result, he was
prevented from boarding a flight to Singapore on June 29, 2002.
Constrained by these circumstances, David filed a complaint for Declaratory
Relief, Sum of Money and Damages before the RTC. He insisted on his
entitlement to the commissions due under the regular and Pares-Pares programs
in his capacity as Principal Agent under the General Agency Agreement with PPI;
that he be allowed to hold the cash deposits of P19,302,902.00 to the extent of
P18,631,900.00 as a trust fund for the benefit of the subscribers of thePares-
Pares program; that RCBC be ordered to recognize no other signatory relative to
the said deposits except him; and that Paragas, Lobrin and Datoy be held liable
in an amount not less than P20,000,000.00, representing the missing amount
and/or unauthorized disbursements from the funds of Olympia, plus the payment
of moral damages, exemplary damages and attorney's fees.
Paragas and Lobrin filed their answers with compulsory counterclaims 8 against
David, to wit:
First Counterclaim — to mandate David to render an accounting of the
amounts mentioned;
Second Counterclaim — to require David to turn over such books of
accounts and other documents owned by Olympia as well as all records
pertaining to Olympia's business transactions in the Philippines;
Third Counterclaim — to make David pay the amount of P24,893,562.90
to Philam as cash bonuses of the respective original subscribers;
Fourth Counterclaim — to make David pay Lobrin and Paragas the
amount of P24,521,245.00 each, as and by way of actual damages,
representing (1) Lobrin and Paragas' respective shares as co-owners in
the net profit of Olympia from the sale of the Pre-need plan under
the pares-pares program in the amount of P14,521,245.00 and the
amount of P10,000,000.00 representing the cost of plane fares, living
allowances and unrealized profit;
Fifth Counterclaim — to hold David liable to pay Lobrin and Paragas the
amount of P20,000,000.00 each, as and by way of moral damages;
Sixth Counterclaim — to make David pay the amount of P10,000,000.00
as and by way of exemplary damages; and
Seventh Counterclaim — to hold David personally liable to pay Lobrin
and Paragas the amount of P1,000,000.00 as attorney's fees, plus such
amount as may be proved during the trial as litigation expenses and cost
of suit. 9
On March 5, 2003, David filed the supplemental complaint, with a manifestation
that an amicable settlement was struck with Lobrin and Datoy whereby they
agreed to withdraw the complaint and counterclaims against each other. On May
6, 2003, Lobrin and Olympia through their counsel, confirmed that on March 26,
2003, they had arrived at a compromise. 10 The agreement clearly stated that
Lobrin was acting on Olympia's behalf, on the basis of a resolution passed during
the board meeting held on March 21, 2003. The settlement reads:
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement, entered into by and between:
DAVID M. DAVID, of legal age, married, Filipino and with address at 23
Pablo Roman Street, BF Homes, Parañaque, hereinafter referred to as
DMD;
-and-
OLYMPIA INTERNATIONAL LIMITED, a corporation organized and
existing under the laws of Hong Kong, with principal office at 13/F Li
Dong Building, 7-11 Li Yuen Street East, Central, Hong Kong, and
herein represented by its Attorney-in-Fact, Henry G. Lobrin, and
herein after referred to as Olympia;
WITNESSETH: That —
WHEREAS, Olympia has passed a board resolution during the meeting
of its Board of Directors held in Hong Kong on 21 March 2003
constituting and appointing as such its herein Attorney-in-Fact for the
purposes stated in said resolution, a copy of which is hereto attached as
Annex "A";
WHEREAS, there is a pending case before Branch 200 of the Regional
Trial Court of Las Pi[ñ]as City docketed as Civil Case No. LP-02-0165
("the Case") and among the defendants in said Case are Henry G.
Lobrin, Federico M. Paragas, Jr. and Roberto S. Datoy who are
presently directors of Olympia;ICHAaT
By:
HENRY G. LOBRIN
Attorney-in Fact
HENRY G. LOBRIN
In his personal capacity
[Emphases supplied] 11
On May 15, 2003, David and Lobrin filed the Joint Omnibus Motion to formally
inform the RTC of the compromise agreement. They asserted the following:
2. n Said agreement was executed between Plaintiff and Olympia, the
latter being represented by Defendant Lobrin as Olympia's
Attorney-in-Fact, pursuant to a resolution passed by a majority
vote during the board meeting held in Hong [Kong] on 21 March
2003 wherein Defendants Lobrin, Paragas, Jr. and Datoy were all
present, authorizing said Attorney-in-Fact to negotiate a
compromise settlement regarding instant case, the payment of
the accrued benefits due the planholders of Philam Plan, Inc.
under the regular and Pares-Pares program as well as the
disposition of the cash and other deposits with Rizal Commercial
Banking Corporation (RCBC) and other accounts in other banks.
Said resolution is appended to the Agreement as its Annex
"A"; SDHacT
David, nevertheless, points out that the validity of the dismissal of the claims and
counterclaims must remain on the argument that the compromise agreement was
made in their personal capacities inasmuch as he filed the complaint against
Paragas, Lobrin and Datoy also in their personal capacities. He draws support
from the Answer with Compulsory Counterclaims 28 filed by Paragas and Lobrin.
The counterclaims against him did not involve Olympia, save for the demand to
render an accounting as well as to turn over the books of account and records
pertaining to the latter. David, thus, stated:
It is very clear from the order of July 21, 2003 that the agreement being
referred to as having been approved is not the Compromise Agreement
but the agreement of the parties to dismiss the claims and counterclaims
against each other. This is obvious when the order stated that it is within
the right of the parties to amicably settle the issues even if subject
Compromise Agreement had not been entered into. Clearly, it was not
the Compromise Agreement that was approved, because precisely it
involved Olympia, but the underlying agreement between the parties to
withdraw their claims against each other which are personal to them in
nature. As noted by the trial court, even without the Compromise
Agreement, parties could still settle the case amicably and withdraw the
claims against one another which is precisely what the parties did. 29
His contention is devoid of merit.
While David repeatedly claims that his complaint against Paragas, Lobrin and
Datoy was personal in character, a review of the causes of action raised by him
in his complaint shows that it primarily involved Olympia. As defined, a cause of
action is an act or omission by which a party violates a right of another. It
requires the existence of a legal right on the part of the plaintiff, a correlative
obligation of the defendant to respect such right and an act or omission of such
defendant in violation of the plaintiff's rights. 30
In his complaint, David raised three causes of action. The first one dealt with the
alleged omission on the part of the other venture partners to respect his right,
being Olympia's beneficial owner and PPI's principal agent under the GAA, over
the income generated from the sale PPI's pre-need plans. The second dealt with
his right over all amounts that the venture partners disbursed in excess of those
authorized by him, under the premise that he remained Olympia's beneficial
owner. The third dealt with the acts of the venture partners in causing undue
humiliation and shame when he was prevented from boarding his Singapore-
bound plane pursuant to the Watch-List Order issued by the Bureau of
Immigration at the behest of a letter sent by the counsel of Paragas. Accordingly,
David prayed that the RTC:
a. Declare him as the one entitled to the commission due under the
regular and Pares-Pares programs net of the agents' commission
in his capacity as Principal Agent under the General Agency
Agreement with Philam Plans, Inc.;
b. Hold the cash deposits of P19,302,902.00 to the extent of
P18,631,900.00 as a trust fund for the benefit of the subscribers
of the Pares-Pares Program and validly held in-trust by [him];
c. Order Defendant RCBC to recognize no other signatory to said
deposits except [him].
xxx xxx xxx 31
Essentially, David was asking for judicial determination of his rights over
Olympia's revenues, funds in the RCBC bank accounts and the amounts used
and expended by Olympia through the acts of its directors/defendants. Nothing
therein can be said to be "personal" claims against Paragas, Lobrin and Datoy,
except for his claim for damages resulting from the humiliation he suffered when
he was prevented from boarding his Singapore-bound plane. Obviously, the
argument that they executed the compromise agreement in their personal
capacities does not hold water.
For even if the Court looks closer at the concessions made, many provisions deal
with Olympia's interests instead of the personal claims they have against one
another. A review of the Joint Omnibus Motion would also show that the
compromise agreement dealt more with David and Olympia. Given this, Olympia
did not have the standing in court to enter into a compromise agreement unless
impleaded as a party. The RTC did not have the authority either to determine
Olympia's rights and obligations. Furthermore, to allow the compromise
agreement to stand is to deprive Olympia of its properties and interest for it was
never shown that the person who signed the agreement on its behalf had any
authority to do so.
More importantly, Lobrin, who signed the compromise agreement, failed to
satisfactorily prove his authority to bind Olympia. The CA observed, and this
Court agrees, that the "board resolution" allegedly granting authority to Lobrin to
enter into a compromise agreement on behalf of Olympia was more of a part of
the "minutes" of a board meeting containing a proposal to settle the case with
David or to negotiate a settlement. It should be noted that the said document was
not prepared or issued by the Corporate Secretary of Olympia but by a
"Secretary to the Meeting." Moreover, the said resolution was neither
acknowledged before a notarial officer in Hong Kong nor authenticated before
the Philippine Consul in Hong Kong. 32 Considering these facts, the RTC should
have denied the Joint Omnibus Motion and disapproved the compromise
agreement. In fine, Olympia was not shown to have properly consented to the
agreement, for the rule is, a corporation can only act through its Board of
Directors or anyone with the authority of the latter. To allow the compromise
agreement to stand is to deprive Olympia of its properties and interest for it was
never shown that Lobrin had the necessary authority to sign the agreement on
Olympia's behalf. DETACa
SO ORDERED.
||| (David v. Paragas, Jr., G.R. No. 176973, [February 25, 2015])
PERLAS-BERNABE, J : p
Before the Court are the following motions: (a) the Motion for
Reconsideration 1 dated May 22, 2013, filed by petitioner Land Bank of the
Philippines (LBP) assailing the Decision 2 dated April 17, 2013 of the Court
(April 17, 2013 Decision), which upheld the Decision 3 dated March 26, 2010
of the Court of Appeals (CA) in CA-G.R. CV. No. 89732 affirming with
modification the Decision 4 dated April 10, 2007 of the Regional Trial Court of
Agoo, La Union, Branch 31 in Civil Case No. A-2473; (b) the Motion for Leave
to Intervene with Pleading-in-Intervention Attached 5 dated July 8, 2013, filed
by the Municipality of Agoo, La Union (Municipality) praying that it be allowed
to intervene in this case; and (c) the Motion for Reconsideration-in-
Intervention 6 dated July 8, 2013, filed by the Municipality seeking that the
Court set aside its April 17, 2013 Decision and promulgate a new one in its
stead dismissing the case (subject motions).
The Facts
The instant case arose from two (2) loans (Subject Loans) entered into
by the Municipality with LBP in order to finance the Redevelopment Plan of
the Agoo Public Plaza (Public Plaza). Through Resolution Nos. 68-2005 7 and
139-2005, 8 the Sangguniang Bayan of the Municipality (Sangguniang Bayan)
authorized its then-Mayor Eufranio Eriguel (Mayor Eriguel) to enter into a
P4,000,000.00-loan with LBP, the proceeds of which were used to construct
ten (10) kiosks at the Public Plaza. Around a year later, the SB issued
Resolution Nos. 58-2006 9 and 128-2006, 10 this time authorizing Mayor
Eriguel to obtain a P28,000,000.00-loan from LBP for the construction of a
commercial center named "Agoo People's Center" within the premises of the
Public Plaza. In order to secure the Subject Loans, the Municipality used as
collateral, among others, a 2,323.75-square meter lot situated at the south
eastern portion of the Public Plaza (Plaza Lot). 11
However, a group of residents, led by respondent Eduardo
M. Cacayuran (Cacayuran), opposed the redevelopment of the Public Plaza,
as well as the funding therefor thru the Subject Loans, claiming that these
were "highly irregular, violative of the law, and detrimental to public interests,
and will result to wanton desecration of the [Public
Plaza]." 12 Further, Cacayuran requested the municipal officers to furnish him
with the various documents relating to the Public Plaza's redevelopment,
which, however, went unheeded. 13 Thus, Cacayuran, invoking his right as a
taxpayer, filed a complaint 14 against LBP and various officers of the
Municipality, including Mayor Eriguel (but excluding the Municipality itself as
party-defendant), assailing the validity of the aforesaid loan agreements and
praying that the commercialization of the Public Plaza be enjoined. 15
Initially, the municipal officers moved for the outright dismissal of the
complaint, which was denied, thus constraining them to file their respective
answers. For its part, LBP asserted, inter alia, that Cacayuran did not have
any cause of action since he was not privy to the loan agreements entered
into by LBP and the Municipality. 16
During the pendency of the proceedings, the construction of the Agoo
People's Center was completed. Later on, the Sangguniang Bayan passed
Municipal Ordinance No. 02-2007 17 declaring the area where such building
stood as patrimonial property of the Municipality. 18
The RTC Ruling
In a Decision 19 dated April 10, 2007, the RTC declared the Subject
Loans null and void, finding that the resolutions approving the procurement of
the same were passed in a highly irregular manner and thus, ultra vires. As
such, it pronounced that the Municipality was not bound by the Subject Loans
and that the municipal officers should, instead, be held personally liable for
the same. Further, it ruled that since the Plaza Lot is a property for public use,
it cannot be used as collateral for the Subject Loans. 20
Aggrieved, LBP and the municipal officers appealed 21 to the CA.
However, the appeal of the municipal officers was deemed abandoned and
dismissed for their failure to file an appellants' brief despite due
notice. 22 Thus, only LBP's appeal was given due course by the CA. 23
The CA Ruling
In a Decision 24 dated March 26, 2010, the CA affirmed the ruling of the
RTC, with modification excluding then-Vice Mayor Antonio Eslao from
personal liability arising from the Subject Loans. It held
that: (a) Cacayuran had locus standi to file the instant complaint, considering
that he is a resident of the Municipality and the issue at hand involved public
interest of transcendental importance; (b) Resolution Nos. 68-2005, 138-2005,
58-2006, 126-2006 were invalidly passed due to non-compliance with certain
provisions of Republic Act No. 7160, 25 otherwise known as the Local
Government Code of 1991 (LGC); (c) the Plaza Lot is property of public
dominion, and thus, cannot be used as collateral; and (d) the procurement of
the Subject Loans were ultra vires acts for having been entered into without
proper authority and that the collaterals used therefor constituted improper
disbursement of public funds. 26
Dissatisfied, LBP filed a petition for review on certiorari 27 before this
Court.
Proceedings Before the Court
In a Decision 28 dated April 17, 2013 the Court denied LBP's petition,
and accordingly, affirmed the ruling of the CA. Agreeing with the CA, the
Court held that:(a) Cacayuran had legal standing to institute a taxpayer's
suit; 29 (b) Resolution Nos. 68-2005, 139-2005, 58-2006, 126-2006 cannot be
relied upon to validate the Subject Loans, as the LGC requires the passing of
an ordinance in order for any loan agreement to be valid; 30 and (c) the
procurement of the Subject Loans are ultra vires acts of the municipal officers
who approved the same, and thus, liability therefor shall devolve upon
them. 31
Undaunted, LBP moved for reconsideration, basically reiterating its
earlier position that Cacayuran had no legal standing to sue, and that
Resolution Nos. 68-2005, 139-2005, 58-2006, and 126-2006 may be relied
upon in validating the Subject Loans. 32
Meanwhile, the Municipality filed a Motion for Leave to Intervene with
Pleading-In-Intervention Attached 33 dated July 8, 2013 and a Motion for
Reconsideration in-Intervention 34 of even date, praying that it be included as
a party-litigant to the instant case. It contends that as a contracting party to
the Subject Loans, it is an indispensable party to the action filed
by Cacayuran. As such, there cannot be any "real disposition" of the instant
suit by reason of its exclusion from the same.
In opposition, 35 Cacayuran maintains that LBP did not raise any new
matter to warrant reconsideration of the April 17, 2013 Decision. Anent the
Municipality's motion to intervene, Cacayuran insists that the Municipality is
not a real party-in-interest to the instant case as his complaint is against the
municipal officers in their personal capacity for their ultra vires acts which are
not binding on the Municipality.
Finally, in its Comment on the Motion for Leave to Intervene and Motion
for Reconsideration-in-Intervention 36 dated May 6, 2014, LBP agrees with the
Municipality that the latter is an indispensable party to the instant case and as
such, should be included herein.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the
Municipality should be deemed as an indispensable party to the instant case,
and thus, be ordered impleaded herein.
The Court's Ruling
The Court rules in the affirmative.
Section 7, Rule 3 of the Rules of Court mandates that all indispensable
parties should be joined in a suit, viz.:
SEC. 7. Compulsory joinder of indispensable parties. — Parties-
in-interest without whom no final determination can be had of an action
shall be joined either as plaintiffs or defendants.
"An indispensable party is one whose interest will be affected by the
court's action in the litigation, and without whom no final determination of the
case can be had. The party's interest in the subject matter of the suit and in
the relief sought are so inextricably intertwined with the other parties' that his
legal presence as a party to the proceeding is an absolute necessity. In his
absence, there cannot be a resolution of the dispute of the parties before the
court which is effective, complete, or equitable." 37 Thus, the absence of an
indispensable party renders all subsequent actions of the court null and void,
for want of authority to act, not only as to the absent parties but even as to
those present. 38
Nevertheless, it must be stressed that the failure to implead any
indispensable party to a suit does not necessarily result in the outright
dismissal of the complaint. In Heirs of Mesina v. Heirs of Fian, Sr., 39 the
Court definitively explained that in instances of non-joinder of indispensable
parties, the proper remedy is to implead them and not to dismiss the case:
The non-joinder of indispensable parties is not a ground for
the dismissal of an action. At any stage of a judicial proceeding
and/or at such times as are just, parties may be added on the motion
of a party or on the initiative of the tribunal concerned. If the plaintiff
refuses to implead an indispensable party despite the order of the
court, that court may dismiss the complaint for the plaintiff's failure to
comply with the order. The remedy is to implead the non-party
claimed to be indispensable. 40 (Emphases and underscoring
supplied)
In this case, a judicious review of the records reveals that Cacayuran's
complaint against LBP and the municipal officers primarily prays that the
commercialization of the Public Plaza be enjoined and also, that the Subject
Loans be declared null and void for having been unlawfully entered into by the
said officers. However, Cacayuran failed to implead in his complaint the
Municipality, a real party-in-interest 41 and an indispensable party that stands
to be directly affected by any judicial resolution on the case, considering
that: (a) the contracting parties to the Subject Loans are LBP and the
Municipality; and (b) the Municipality owns the Public Plaza as well as the
improvements constructed thereon, including the Agoo People's Center. As
the Municipality aptly points out: 42
3. To recapitulate: The case had its beginnings in the two (2)
Loans obtained by [the Municipality] from [LBP] and by the Board
Resolutions passed and adopted by the Sangguniang Bayan of Agoo,
La Union, together with the Mayor and Vice-Mayor of the Municipality.
xxx xxx xxx
3d. The two (2) Loans were covered and evidenced by separate
Loan Agreements and Mortgage/Assignment Documents. The parties
which entered into and executed the covering documents were
[LBP] as lender and [the Municipality] as borrower.
3e. When the construction was about 40% complete,
[Cacayuran] as a taxpayer filed the case against the: (i) Mayor; (ii)
Vice-Mayor; and (iii) Ten (10) Members [of] the Sangguniang Bayan
[of] Agoo, La Union, as defendants. [The Municipality] was excluded,
and was not impleaded as a defendant in the case.
xxx xxx xxx
Indeed, [the Municipality] [on whose lands stands and is
found the Agoo Public Plaza, where the Kiosks and Commercial
Building were under construction and which constructions were
sought to be restrained] stands to be benefited or injured by the
judgment in the case so filed or the party entitled to the avails of
the case and is, therefore, the real party-in-interest.
xxx xxx xxx
3k. Without having to say so, the RTC dispositions as
affirmed with modification by the CA Decision which, in turn was
affirmed by the SC Decision must not be binding upon [the
Municipality], the real party-in-interest, the indispensable party in
fact, not impleaded as defendant in this case.43 (Emphases and
underscoring supplied).
The Court observes that it is only now that the issue of the
Municipality's exclusion from the instant case, despite its status as an
indispensable party, became apparent. This recent finding may be credited to
the fact that the initial parties before the Court, i.e., LBP and Cacayuran, have
dissimilar interests from that of the Municipality, and, hence, had no incentive
to raise the issue of the latter's status as an indispensable party. On the one
hand, Cacayuran's interest to the case is centered on the declaration of nullity
of the Subject Loans, as well as the enjoinment of the commercialization of
the Public Plaza; and on the other hand, LBP's interest to the case is
anchored on its capacity as creditor to the Subject Loans. To the mind of the
Court, the municipal officers would have been in the best position to raise this
issue; however, they were unable to do so because their appeal before the
CA was deemed abandoned for their failure to file an appellants' brief on time.
Be that as it may, the Court is not precluded from taking cognizance of
the Municipality's status as an indispensable party even at this stage of the
proceedings. Indeed, the presence of indispensable parties is necessary to
vest the court with jurisdiction 44 and, corollarily, the issue on jurisdiction may
be raised at any stage of the proceedings. 45 Thus, as it has now come to the
fore that any resolution of this case would not be possible and, hence, not
attain any real finality due to the non-joinder of the Municipality, the Court is
constrained to set aside all subsequent actuations of the courts a quo in this
case, including that of the Court's, and remand the case all the way back to
the RTC for the inclusion of all indispensable parties to the case and its
immediate disposition on the merits. 46 With this, the propriety of the
Municipality's present intervention is now mooted.
WHEREFORE, the subject motions are PARTLY GRANTED. The
Decision dated April 17, 2013 of the Court, which upheld the Decision dated
March 26, 2010 of the Court of Appeals in CA-G.R. CV. No. 89732 affirming
with modification the Decision dated April 10, 2007 of the Regional Trial Court
of Agoo, La Union, Branch 31 in Civil Case No. A-2473 is hereby SET ASIDE.
Accordingly, the instant case is REMANDED to the court a quo, which is
hereby DIRECTED to order respondent Eduardo M. Cacayuran to implead all
indispensable parties and thereafter, PROCEED with the resolution of the
case on the merits WITH DISPATCH.
SO ORDERED.
||| (Land Bank of the Phils. v. Cacayuran, G.R. No. 191667, [April 22, 2015])
FIRST DIVISION
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL ACTIONS;
INDISPENSABLE PARTIES; THE PRESENCE OF INDISPENSABLE PARTIES
IS NECESSARY TO VEST THE COURT WITH JURISDICTION; CASE AT BAR.
— An indispensable party is a party in interest without whom no final
determination can be had of an action, and who shall be joined either as plaintiffs
or defendants. The joinder of indispensable parties is mandatory. The presence
of indispensable parties is necessary to vest the court with jurisdiction, which is
"the authority to hear and determine a cause, the right to act in a case". Thus,
without the presence of indispensable parties to a suit or proceeding, judgment of
a court cannot attain real finality. The absence of an indispensable party renders
all subsequent actions of the court null and void for want of authority to act, not
only as to the absent parties but even as to those present. In the case at bar, 7J
is an indispensable party. It is a party in interest because it will be affected by the
outcome of the case. The Labor Arbiter and the NLRC found 7J to be solely
liable as the employer of respondents. The Court of Appeals however rendered
Lotte jointly and severally liable with 7J who was not impleaded by holding that
the former is the real employer of respondents. Plainly, its decision directly
affected 7J.
2. ID.; ID.; ID.; ID.; COMPULSORY JOINDER OF INDISPENSABLE
PARTIES; NON-JOINDER OF INDISPENSABLE PARTIES IS NOT A GROUND
FOR THE DISMISSAL OF THE ACTION. — In Domingo v. Scheer, we held that
the non-joinder of indispensable parties is not a ground for the dismissal of an
action and the remedy is to implead the non-party claimed to be indispensable.
Parties may be added by order of the court on motion of the party or on its own
initiative at any stage of the action and/or such times as are just. If the petitioner
refuses to implead an indispensable party despite the order of the court, the latter
may dismiss the complaint/petition for the petitioner/plaintiff's failure to comply
therefor.
3. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — Although 7J was a co-party
in the case before the Labor Arbiter and the NLRC, respondents failed to include
it in their petition for certiorari in the Court of Appeals. Hence, the Court of
Appeals did not acquire jurisdiction over 7J. No final ruling on this matter can be
had without impleading 7J, whose inclusion is necessary for the effective and
complete resolution of the case and in order to accord all parties with due
process and fair play.
DECISION
YNARES-SANTIAGO, J : p
This petition for review on certiorari 1 assails the July 9, 2004 decision 2 of
the Court of Appeals in CA-G.R. SP No. 72732 and its November 26, 2004
resolution 3denying reconsideration thereof.
The established facts of this case are as follows:
Private respondent (petitioner herein) Lotte Phils., Inc. (Lotte) is a
domestic corporation. Petitioners (respondents herein) are among those
who were hired and assigned to the confectionery facility operated by
private respondent.
On December 14, 1995 — and yearly thereafter until the year
2000 — 7J Maintenance and Janitorial Services ("7J") entered into a
contract with private respondent to provide manpower for needed
maintenance, utility, janitorial and other services to the latter. In
compliance with the terms and conditions of the service contract, and to
accommodate the needs of private respondent for personnel/workers to
do and perform "piece works," petitioners, among others, were hired and
assigned to private respondent as repackers or sealers.
However, either in October, 1999 or on February 9, 2000, private
respondent dispensed with their services allegedly due to the
expiration/termination of the service contract by respondent with 7J.
They were either told "hwag muna kayong pumasok at tatawagan na
lang kung may gawa"; or were asked to wait "pag magrereport sila sa
trabaho." Unfortunately, petitioners were never called back to work
again.
Aggrieved, petitioners lodged a labor complaint against
both private respondent Lotte and 7J, for illegal dismissal, regularization,
payment of corresponding backwages and related employment benefits,
13th month pay, service incentive leave, moral and exemplary damages
and attorney's fees based on total judgment award. 4
On February 28, 2001, Labor Arbiter Cresencio G. Ramos, Jr., rendered
judgment 5 declaring 7J as employer of respondents. 6 The arbiter also found 7J
guilty of illegal dismissal 7 and ordered to reinstate respondents, 8 pay
P2,374,710.00 as backwages, P713,648.00 as 13th month pay and P117,000.00
as service incentive leave pay. 9
Respondents appealed to the National Labor Relations Commission
(NLRC) praying that Lotte be declared as their direct employer because 7J is
merely a labor-only contractor. In its decision 10 dated April 24, 2002, the NLRC
found no cogent reason to disturb the findings of the labor arbiter and affirmed its
ruling that 7J is the employer of respondents and solely liable for their claims.
Respondents' motion for reconsideration was denied by the NLRC in a
resolution dated June 18, 2002.
Undaunted, they filed a petition for certiorari in the Court of
Appeals 11 against the NLRC and Lotte, insisting that their employer is Lotte and
not 7J.
Lotte, however, denied that respondents were its employees. It prayed that
the petition be dismissed for failure to implead 7J who is a party interested in
sustaining the proceedings in court, pursuant to Section 3, Rule 46 of the
Revised Rules of Civil Procedure.
On July 9, 2004, the Court of Appeals reversed and set aside the rulings of
the Labor Arbiter and the NLRC. In its decision, the Court of Appeals declared
Lotte as the real employer of respondents and that 7J who engaged in labor-only
contracting was merely the agent of Lotte. Respondents who performed activities
directly related to Lotte's business were its regular employees under Art. 280 of
the Labor Code. As such, they must be accorded security of tenure and their
services terminated only on "just" and "authorized" causes. DSHcTC
Lotte's motion for reconsideration was denied, hence this petition, on the
following issues:
8. Whether or not petitioner herein had the burden of proof to
establish before the proceedings in the Court of Appeals that 7J
Maintenance and Janitorial Service was not a labor-only contractor.
8.1. Whether or not the Petition in CA-G.R. SP No. 72732 is
dismissible for failure to comply with Section 3, Rule 46 in relation to
Section 5, Rule 65 of the 1997 Rules of Civil Procedure. 12
We first resolve the procedural issue raised by petitioner. Lotte asserts that
7J is an indispensable party and should have been impleaded in respondents'
petition in the Court of Appeals. It claims that the petition before the Court of
Appeals was dismissible for failure to comply with Section 3, 13 Rule 46 in
relation to Section 5 14of Rule 65 of the Revised Rules of Civil Procedure. cITCAa
In light of the foregoing, the Court sees no need to discuss the second
issue raised by petitioner.
WHEREFORE, the July 9, 2004 decision of the Court of Appeals in CA-
G.R. SP No. 72732 and the November 26, 2004 resolution, are SET ASIDE. Let
the case be REMANDED to the Court of Appeals to include 7J Maintenance and
Janitorial Services as an indispensable party to the case for further proceedings.
SO ORDERED.
(Lotte Phil. Co., Inc. v. Dela Cruz, G.R. No. 166302, [July 28, 2005], 502
|||
PHIL 816-822)
THIRD DIVISION
DECISION
CARPIO MORALES, J : p
Petitioner countered in his Answer to the Complaint that the sale was
void for lack of object certain, the kasunduan not having specified the metes
and bounds of the land. In any event, petitioner alleged that if the validity of
the kasunduan is upheld, respondents' failure to comply with their reciprocal
obligation to pay the balance of the purchase price would render the action
premature. For, contrary to respondents' claim, petitioner maintained that they
failed to pay the balance of P28,000 on September 1990 to thus constrain him
to accept installment payments totaling P9,100.
After the case was submitted for decision or on January 31,
2001, 2 petitioner passed away. The records do not show that petitioner's
counsel informed Branch 1 of the Bataan RTC, where the complaint was
lodged, of his death and that proper substitution was effected in accordance
with Section 16, Rule 3, Rules of Court. 3
By Decision of February 25, 2001, 4 the trial court ruled in favor of
respondents, disposing as follows:
WHEREFORE, premises considered, judgment is hereby rendered
ordering:
1. The defendant to sell his right over 648 square meters of land
pursuant to the contract dated July 10, 1990 by executing a Deed
of Sale thereof after the payment of P18,900 by the plaintiffs;
2. The defendant to pay the costs of the suit.
SO ORDERED. 5
Petitioner's counsel filed a Notice of Appeal on March 20, 2001.
By the herein challenged Decision dated July 20, 2009, 6 the Court of
Appeals affirmed that of the trial court.
Petitioner's motion for reconsideration having been denied by
Resolution of January 8, 2010, the present petition for review was filed by
Antonio Carabeo, petitioner's son, 7 faulting the appellate court:
(A)
. . . in holding that the element of a contract, i.e., an object certain is
present in this case.
(B)
. . . in considering it unfair to expect respondents who are not lawyers to
make judicial consignation after herein petitioner allegedly refused to
accept payment of the balance of the purchase price.
(C)
. . . in upholding the validity of the contract, "Kasunduan sa Bilihan ng
Karapatan sa Lupa," despite the lack of spousal consent, (underscoring
supplied) TCaEIc
565-571)
THIRD DIVISION
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL ACTIONS;
WHEN A PARTY TO A PENDING ACTION DIES AND THE CLAIM IS NOT
EXTINGUISHED, SUBSTITUTION OF THE DECEASED IS REQUIRED;
PURPOSE. — When a party to a pending action dies and the claim is not
extinguished, the Rules of Court require a substitution of the deceased. The
procedure is specifically governed by Section 16 of Rule 3, . . . . The rule on the
substitution of parties was crafted to protect every party's right to due process.
The estate of the deceased party will continue to be properly represented in the
suit through the duly appointed legal representative. Moreover, no adjudication
can be made against the successor of the deceased if the fundamental right to a
day in court is denied.
2. ID.; ID.; ID.; ID.; A FORMAL SUBSTITUTION BY HEIRS IS NOT
NECESSARY WHEN THEY THEMSELVES VOLUNTARILY APPEAR,
PARTICIPATE IN THE CASE, AND PRESENT EVIDENCE IN DEFENSE OF
THE DECEASED. — The Court has nullified not only trial proceedings conducted
without the appearance of the legal representatives of the deceased, but also the
resulting judgments. In those instances, the courts acquired no jurisdiction over
the persons of the legal representatives or the heirs upon whom no judgment
was binding. This general rule notwithstanding, a formal substitution by heirs is
not necessary when they themselves voluntarily appear, participate in the case,
and present evidence in defense of the deceased. These actions negate any
claim that the right to due process was violated.
3. ID.; ID.; ID.; ID.; RULE ON SUBSTITUTION BY HEIRS IS NOT A
MATTER OF JURISDICTION BUT A REQUIREMENT OF DUE PROCESS. —
Strictly speaking, the rule on the substitution by heirs is not a matter of
jurisdiction, but a requirement of due process. Thus, when due process is not
violated, as when the right of the representative or heir is recognized and
protected, noncompliance or belated formal compliance with the Rules cannot
affect the validity of a promulgated decision. Mere failure to substitute for a
deceased plaintiff is not a sufficient ground to nullify a trial court's decision. The
alleging party must prove that there was an undeniable violation of due process.
4. ID.; ID.; ACTIONS; FORUM SHOPPING; DEFINED. — Forum shopping
is the institution of two or more actions or proceedings involving the same parties
for the same cause of action, either simultaneously or successively, on the
supposition that one or the other court would make a favorable disposition.
Forum shopping may be resorted to by a party against whom an adverse
judgment or order has been issued in one forum, in an attempt to seek a
favorable opinion in another, other than by an appeal or a special civil action for
certiorari.
5. ID.; ID.; ID.; ID.; WILLFUL AND DELIBERATE VIOLATION OF THE
RULE ON FORUM SHOPPING IS A GROUND FOR THE SUMMARY
DISMISSAL OF CASE AND CONSTITUTES DIRECT CONTEMPT OF COURT.
— Forum shopping trifles with the courts, abuses their processes, degrades the
administration of justice, and congests court dockets. Willful and deliberate
violation of the rule against it is a ground for the summary dismissal of the case;
it may also constitute direct contempt of court.
6. ID.; ID.; ID.; ID.; TEST TO DETERMINE ITS EXISTENCE. — The test
for determining the existence of forum shopping is whether the elements of litis
pendentia are present, or whether a final judgment in one case amounts to res
judicata in another.
7. ID.; ID.; JUDGMENTS; RES JUDICATA; BARS A SUBSEQUENT SUIT
INVOLVING THE SAME PARTIES, SUBJECT MATTER, AND CAUSE OF
ACTION. — Under res judicata, a final judgment or decree on the merits by a
court of competent jurisdiction is conclusive of the rights of the parties or their
privies, in all later suits and on all points and matters determined in the previous
suit. The term literally means a "matter adjudged, judicially acted upon, or settled
by judgment." The principle bars a subsequent suit involving the same parties,
subject matter, and cause of action. Public policy requires that controversies
must be settled with finality at a given point in time.
8. ID.; ID.; ID.; ID.; ELEMENTS OF RES JUDICATA. — The elements of
res judicata are as follows: (1) the former judgment or order must be final; (2) it
must have been rendered on the merits of the controversy; (3) the court that
rendered it must have had jurisdiction over the subject matter and the parties;
and (4) there must have been — between the first and the second actions — an
identity of parties, subject matter and cause of action.
DECISION
PANGANIBAN, J : p
The Court has nullified not only trial proceedings conducted without the
appearance of the legal representatives of the deceased, but also the resulting
judgments. 25 In those instances, the courts acquired no jurisdiction over the
persons of the legal representatives or the heirs upon whom no judgment was
binding. 26
This general rule notwithstanding, a formal substitution by heirs is not
necessary when they themselves voluntarily appear, participate in the case, and
present evidence in defense of the deceased. 27 These actions negate any claim
that the right to due process was violated.
The Court is not unaware of Chittick v. Court of Appeals, 28 in which the
failure of the heirs to substitute for the original plaintiff upon her death led to the
nullification of the trial court's Decision. The latter had sought to recover support
in arrears and her share in the conjugal partnership. The children who allegedly
substituted for her refused to continue the case against their father and
vehemently objected to their inclusion as parties. 29 Moreover, because he died
during the pendency of the case, they were bound to substitute for the defendant
also. The substitution effectively merged the persons of the plaintiff and the
defendant and thus extinguished the obligation being sued upon. 30
Clearly, the present case is not similar, much less identical, to the factual
milieu of Chittick.
Strictly speaking, the rule on the substitution by heirs is not a matter of
jurisdiction, but a requirement of due process. Thus, when due process is not
violated, as when the right of the representative or heir is recognized and
protected, noncompliance or belated formal compliance with the Rules cannot
affect the validity of a promulgated decision. 31 Mere failure to substitute for a
deceased plaintiff is not a sufficient ground to nullify a trial court's decision. The
alleging party must prove that there was an undeniable violation of due
process. TECIaH
Substitution in
the Instant Case
The records of the present case contain a "Motion for Substitution of Party
Plaintiff" dated February 15, 2002, filed before the CA. The prayer states as
follows:
"WHEREFORE, it is respectfully prayed that the Heirs of the
deceased plaintiff-appellee as represented by his daughter Lourdes dela
Cruz be substituted as party-plaintiff for the said Pedro Joaquin.
"It is further prayed that henceforth the undersigned counsel 32 for
the heirs of Pedro Joaquin be furnished with copies of notices, orders,
resolutions and other pleadings at its address below."
Evidently, the heirs of Pedro Joaquin voluntary appeared and participated
in the case. We stress that the appellate court had ordered 33 his legal
representatives to appear and substitute for him. The substitution even on appeal
had been ordered correctly. In all proceedings, the legal representatives must
appear to protect the interests of the deceased. 34 After the rendition of judgment,
further proceedings may be held, such as a motion for reconsideration or a new
trial, an appeal, or an execution. 35
The elements of res judicata are as follows: (1) the former judgment or
order must be final; (2) it must have been rendered on the merits of the
controversy; (3) the court that rendered it must have had jurisdiction over the
subject matter and the parties; and (4) there must have been — between the first
and the second actions — an identity of parties, subject matter and cause of
action. 45
Failure to Support Allegation
The onus of proving allegations rests upon the party raising them. 46 As to
the matter of forum shopping and res judicata, petitioners have failed to provide
this Court with relevant and clear specifications that would show the presence of
an identity of parties, subject matter, and cause of action between the present
and the earlier suits. They have also failed to show whether the other case was
decided on the merits. Instead, they have made only bare assertions involving its
existence without reference to its facts. In other words, they have alleged
conclusions of law without stating any factual or legal basis. Mere mention of
other civil cases without showing the identity of rights asserted and reliefs sought
is not enough basis to claim that respondent is guilty of forum shopping, or
that res judicata exists. 47
WHEREFORE, the Petition is DENIED and the assailed Decision and
Resolution are AFFIRMED. Costs against petitioners. ASETHC
SO ORDERED.
(Spouses De la Cruz v. Joaquin, G.R. No. 162788, [July 28, 2005], 502 PHIL
|||
803-815)
SECOND DIVISION
DECISION
BRION, J : p
This is a petition for review on certiorari 1 that seeks to set aside the
Court of Appeals (CA) Decision 2 dated October 16, 2001 and
Resolution 3 dated May 29, 2002 in CA-G.R. SP. No. 64701. These CA
rulings affirmed the July 26, 2000 4 and March 7, 2001 5 orders of the
Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City, denying
petitioner Roger V. Navarro's (Navarro) motion to dismiss.
BACKGROUND FACTS
On September 12, 1998, respondent Karen T. Go filed two complaints,
docketed as Civil Case Nos. 98-599 (first complaint) 6 and 98-598 (second
complaint), 7before the RTC for replevin and/or sum of money with damages
against Navarro. In these complaints, Karen Go prayed that the RTC issue
writs of replevin for the seizure of two (2) motor vehicles in Navarro's
possession.
The first complaint stated:
1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to
GLENN O. GO, a resident of Cagayan de Oro City and doing business
under the trade name KARGO ENTERPRISES, an entity duly
registered and existing under and by virtue of the laws of the Republic of
the Philippines, which has its business address at Bulua, Cagayan de
Oro City; that defendant ROGER NAVARRO is a Filipino, of legal age, a
resident of 62 Dolores Street, Nazareth, Cagayan de Oro City, where he
may be served with summons and other processes of the Honorable
Court; that defendant "JOHN DOE" whose real name and address are at
present unknown to plaintiff is hereby joined as party defendant as he
may be the person in whose possession and custody the personal
property subject matter of this suit may be found if the same is not in the
possession of defendant ROGER NAVARRO;
2. That KARGO ENTERPRISES is in the business of, among others,
buying and selling motor vehicles, including hauling trucks and other
heavy equipment; SEHACI
In Domingo v. Scheer, this Court held that the proper remedy when a
party is left out is to implead the indispensable party at any stage of the
action. The court, eithermotu proprio or upon the motion of a party, may
order the inclusion of the indispensable party or give the plaintiff
opportunity to amend his complaint in order to include indispensable
parties. If the plaintiff to whom the order to include the indispensable
party is directed refuses to comply with the order of the court, the
complaint may be dismissed upon motion of the defendant or upon the
court's own motion. Only upon unjustified failure or refusal to obey the
order to include or to amend is the action dismissed.
In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to
join her husband as a party plaintiff is fully in order.
Demand not required prior
to filing of replevin action
In arguing that prior demand is required before an action for a writ of
replevin is filed, Navarro apparently likens a replevin action to an unlawful
detainer.
For a writ of replevin to issue, all that the applicant must do is to file an
affidavit and bond, pursuant to Section 2, Rule 60 of the Rules, which states:
Sec. 2. Affidavit and bond. —
The applicant must show by his own affidavit or that of some other
person who personally knows the facts:
(a) That the applicant is the owner of the property claimed,
particularly describing it, or is entitled to the
possession thereof;
(b) That the property is wrongfully detained by the adverse party,
alleging the cause of detention thereof according to the best of his
knowledge, information, and belief;
(c) That the property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of
execution or preliminary attachment, or otherwise placed
under custodia legis, or if so seized, that it is exempt from such
seizure or custody; and
(d) The actual market value of the property.
The applicant must also give a bond, executed to the adverse party in
double the value of the property as stated in the affidavit
aforementioned, for the return of the property to the adverse party if such
return be adjudged, and for the payment to the adverse party of such
sum as he may recover from the applicant in the action.
We see nothing in these provisions which requires the applicant to
make a prior demand on the possessor of the property before he can file an
action for a writ of replevin. Thus, prior demand is not a condition precedent to
an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a
prior demand is necessary, as he has already admitted in his Answers that he
had received the letters that Karen Go sent him, demanding that he either pay
his unpaid obligations or return the leased motor vehicles. Navarro's position
that a demand is necessary and has not been made is therefore totally
unmeritorious. acCITS
21)
FIRST DIVISION
DECISION
PERLAS-BERNABE, J : p
Cases:
1. Pacific Consultants International Asia v Schonfeld, G.R. No. 166920
THIRD DIVISION
DECISION
CALLEJO, SR., J : p
On February 26, 1999, the DOLE granted the application and issued the
Permit to respondent. It reads:
Republic of the Philippines
Department of Labor & Employment
National Capital Region
ALIEN EMPLOYMENT PERMIT
ISSUED TO: SCHONFELD, KLAUS KURT
DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian
POSITION: VP — WATER & SANITATION
EMPLOYER: PACICON PHILIPPINES, INC.
ADDRESS: 27/F Rufino Pacific Towers Bldg.,
Ayala Ave., Makati City
PERMIT
ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:
VALID UNTIL: January 7, 2000 (Sgd.)
APPROVED: BIENVENIDO S. LAGUESMA
By: MAXIMO B. ANITO
REGIONAL DIRECTOR
(Emphasis supplied) 6
Respondent received his compensation from PPI for the following periods:
February to June 1998, November to December 1998, and January to August
1999. He was also reimbursed by PPI for the expenses he incurred in connection
with his work as sector manager. He reported for work in Manila except for
occasional assignments abroad, and received instructions from Henrichsen. 7
On May 5, 1999, respondent received a letter from Henrichsen informing
him that his employment had been terminated effective August 4, 1999 for the
reason that PCIJ and PPI had not been successful in the water and sanitation
sector in the Philippines. 8 However, on July 24, 1999, Henrichsen, by electronic
mail, 9 requested respondent to stay put in his job after August 5, 1999, until such
time that he would be able to report on certain projects and discuss all the
opportunities he had developed. 10 Respondent continued his work with PPI until
the end of business hours on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary,
leave pay, air fare from Manila to Canada, and cost of shipment of goods to
Canada. PPI partially settled some of his claims (US$5,635.99), but refused to
pay the rest.
On December 5, 2000, respondent filed a Complaint 11 for Illegal Dismissal
against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as
NLRC-NCR Case No. 30-12-04787-00.
In his Complaint, respondent alleged that he was illegally dismissed; PPI
had not notified the DOLE of its decision to close one of its departments, which
resulted in his dismissal; and they failed to notify him that his employment was
terminated after August 4, 1999. Respondent also claimed for separation pay
and other unpaid benefits. He alleged that the company acted in bad faith and
disregarded his rights. He prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents to
reinstate complainant to his former position without loss of seniority and
other privileges and benefits, and to pay his full backwages from the time
compensation was with held (sic) from him up to the time of his actual
reinstatement. In the alternative, if reinstatement is no longer feasible,
respondents must pay the complainant full backwages, and separation
pay equivalent to one month pay for every year of service, or in the
amount of US$16,400.00 as separation pay;
2. Judgment be rendered ordering the respondents to pay the
outstanding monetary obligation to complainant in the amount of
US$10,131.76 representing the balance of unpaid salaries, leave pay,
cost of his air travel and shipment of goods from Manila to Canada;
and SHCaEA
II
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
LABOR ARBITER A QUO HAS JURISDICTION OVER
RESPONDENT'S CLAIM DESPITE THE UNDISPUTED FACT THAT
RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A
FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT
CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE
BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE COURT OF
ARBITRATION IN LONDON." 24
Petitioners fault the CA for reversing the findings of the Labor Arbiter and
the NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by
the NLRC, are conclusive on the CA. They maintain that it is not within the
province of the appellate court in a petition for certiorari to review the facts and
evidence on record since there was no conflict in the factual findings and
conclusions of the lower tribunals. Petitioners assert that such findings and
conclusions, having been made by agencies with expertise on the subject matter,
should be deemed binding and conclusive. They contend that it was the PCIJ
which employed respondent as an employee; it merely seconded him to
petitioner PPI in the Philippines, and assigned him to work in Manila as Sector
Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the
employer of respondent.
Petitioners assert that the January 9, 1998 letter of employment which
respondent presented to prove his employment with petitioner PPI is of doubtful
authenticity since it was unsigned by the purported parties. They insist that PCIJ
paid respondent's salaries and only coursed the same through petitioner PPI.
PPI, being its subsidiary, had supervision and control over respondent's work,
and had the responsibilities of monitoring the "daily administration" of
respondent. Respondent cannot rely on the pay slips, expenses claim forms, and
reimbursement memoranda to prove that he was an employee of petitioner PPI
because these documents are of doubtful authenticity.
Petitioners further contend that, although Henrichsen was both a director
of PCIJ and president of PPI, it was he who signed the termination letter of
respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJ's
letterhead was used to inform him that his employment was terminated.
Petitioners further assert that all work instructions came from PCIJ and that
petitioner PPI only served as a "conduit." Respondent's Alien Employment Permit
stating that petitioner PPI was his employer is but a necessary consequence of
his being "seconded" thereto. It is not sufficient proof that petitioner PPI is
respondent's employer. The entry was only made to comply with the DOLE
requirements.
Petitioners contend that respondent should have filed his Complaint in his
place of permanent residence, or where the PCIJ holds its principal office, at the
place where the contract of employment was signed, in London as stated in their
contract. By enumerating possible venues where respondent could have filed his
complaint, however, petitioners themselves admitted that the provision on venue
in the employment contract is indeed merely permissive.
DECISION
TINGA, J :
p
3. BPI Savings Bank v Sps. Yujuico 763 SCRA 486 (July 2015)
FIRST DIVISION
DECISION
BERSAMIN, ** J : p
Antecedents
On August 22, 1996, the City of Manila filed a complaint against the
respondents for the expropriation of five parcels of land located in Tondo,
Manila and registered in the name of respondent Teresita Yujuico. Two of the
parcels of land, covered by Transfer Certificate of Title (TCT) No. 261331 and
TCT No. 261332, were previously mortgaged to Citytrust Banking
Corporation, the petitioner's predecessor-in-interest, under a First Real Estate
Mortgage Contract. 4 On June 30, 2000, the Regional Trial Court in Manila
(Manila RTC) rendered its judgment declaring the five parcels of land
expropriated for public use. The judgment became final and executory on
January 28, 2001 and was entered in the book of entries of judgment on
March 23, 2001. 5 The petitioner subsequently filed a Motion to Intervene in
Execution with Partial Opposition to Defendant's Request to Release, but the
RTC denied the motion for having been "filed out of time." Hence, the
petitioner decided to extrajudicially foreclose the mortgage constituted on the
two parcels of land subject of the respondents' loan. After holding the public
auction, the sheriff awarded the two lots to the petitioner as the highest bidder
at P10,000,000.00. 6
Claiming a deficiency amounting to P18,522,155.42, the petitioner sued
the respondents to recover such deficiency in the Makati RTC (Civil Case No.
03-450). The respondents moved to dismiss the complaint on several
grounds, namely: that the suit was barred by res judicata; that the complaint
stated no cause of action; and that the plaintiff's claim had been waived,
abandoned, or extinguished. 7
In its order issued on October 17, 2003, the Makati RTC denied the
respondents' motion to dismiss, ruling that there was no res judicata; that the
complaint stated a sufficient cause of action to recover the deficiency; and
that there was nothing to support the claim that the obligation had been
abandoned or extinguished apart from the respondents' contention that the
properties had been subjected to expropriation by the City of Manila. 8
On November 4, 2003, the respondents moved for reconsideration,
reiterating their grounds earlier made in their motion to dismiss. 9
In turn, the petitioner adopted its comment/opposition to the motion to
dismiss. 10
The respondents then filed their reply, 11 in which they raised for the
first time their objection on the ground of improper venue. They contended
that the action for the recovery of the deficiency, being a supplementary
action of the extrajudicial foreclosure proceedings, was a real action that
should have been brought in the Manila RTC because Manila was the place
where the properties were located. 12
On February 1, 2005, the Makati RTC denied the respondents' motion
for reconsideration for its lack of merit; and held on the issue of improper
venue that:
It would be improper for this Court to dismiss the plaintiff's
complaint on the ground of improper venue, assuming that the venue
is indeed improperly laid, since the said ground was not raised in the
defendant's Motion to Dismiss. On this point, it was held in the case
of Malig, et al., vs. Bush, L-22761, May 31, 1969 that "an action cannot
be dismissed on a ground not alleged in the motion therefore even if
said ground, e.g., prescription, is provided in Role 16. 13
Decision of the CA
Not satisfied, the respondents assailed the orders dated October 17,
2003 and February 1, 2005 by petition for certiorari. 14 They submitted for
consideration by the CA the following issues, namely:
. . . (WHETHER OR NOT) RESPONDENT TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED ITS
ASSAILED ORDERS CONSIDERING THAT:
A. THE COMPLAINT A QUO IS BARRED BY RES
JUDICATA.
B. THE COMPLAINT STATED NO CAUSE OF
ACTION.
C. PRIVATE RESPONDENT'S CLAIM HAS BEEN
WAIVED, ABANDONED OR OTHERWISE
EXTINGUISHED.
D. VENUE WAS IMPROPERLY LAID. 15
On March 31, 2006, the CA granted the petition for certiorari of the
respondents on the basis of the fourth issue, opining:
xxx xxx xxx
Thus, a suit for recovery of the deficiency after the
foreclosure of a mortgage is in the nature of a mortgage action
because its purpose is precisely to enforce the mortgage
contract; it is upon a written contract and upon an obligation of
the mortgage-debtor to pay the deficiency which is created by
law. As such, the venue of an action for recovery of deficiency must
necessarily be the same venue as that of the extrajudicial foreclosure
of mortgage.
xxx xxx xxx
In this regard, We take note that the parcels of land subject of
the mortgage contract are located in Tondo, Manila, under Transfer
Certificates of Title Nos. 216331 and 216332. On the other hand, the
extrajudicial foreclosure of the real estate mortgage took place at the
RTC of Manila on January 28, 2003. Thus, the suit for judgment on
the deficiency filed by respondent BPI against petitioners Yujuico,
being an action emanating from the foreclosure of the real estate
mortgage contract between them, must necessarily be filed also
at the RTC of Manila, not at the RTC of Makati.
xxx xxx xxx 16
The CA denied the respondents' Motion for Partial Reconsideration and
the petitioner's Partial Motion for Reconsideration on December 7, 2006. 17
Issues
Hence, this appeal by the petitioner, to assail the CA's dismissal of Civil
Case No. 03-450 on the ground of improper venue upon the following
grounds, 18namely:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS'
DENIAL OF THE PETITIONER'S PARTIAL MOTION FOR
RECONSIDERATION ON THE GROUND OF IMPROPER VENUE AS
A RESULT DISMISSED THE COMPLAINT FOR SUM OF MONEY IS
CONTRARY TO LAW.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS['] ACT
OF APPRECIATING THE ADDITIONAL GROUND OF IMPROPER
VENUE, ONLY RAISED IN THE MOTION FOR RECONSIDERATION
FILED IN THE LOWER COURT AFTER IT DENIED RESPONDENTS'
MOTION TO DISMISS, IS CONTRARY TO LAW AND
JURISPRUDENCE. 19
Ruling of the Court
We grant the petition for review on certiorari.
It is basic that the venue of an action depends on whether it is a real or
a personal action. The determinants of whether an action is of a real or a
personal nature have been fixed by the Rules of Court and relevant
jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real
action is one that affects title to or possession of real property, or an interest
therein. Thus, an action for partition or condemnation of, or foreclosure of
mortgage on, real property is a real action.20 The real action is to be
commenced and tried in the proper court having jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated, which
explains why the action is also referred to as a local action. In contrast,
the Rules of Court declares all other actions as personal actions. 21 Such
actions may include those brought for the recovery of personal property, or for
the enforcement of some contract or recovery of damages for its breach, or
for the recovery of damages for the commission of an injury to the person or
property. 22 The venue of a personal action is the place where the plaintiff or
any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant where
he may be found, at the election of the plaintiff, 23 for which reason the action
is considered a transitory one. SaCIDT
22, 2015])
Case: A.L. Ang Network Inc v Mondejar 714 SCRA (January 28, 2014)
SECOND DIVISION
RESOLUTION
PERLAS-BERNABE, J : p
This is a direct recourse 1 to the Court from the Decision 2 dated November 23,
2011 and Order 3 dated February 16, 2012 of the Regional Trial Court of Bacolod
City, Branch 45 (RTC) in RTC Case No. 11-13833 which dismissed, on the
ground of improper remedy, petitioner A.L. Ang Network, Inc.'s (petitioner)
petition for certiorarifrom the Decision 4 dated June 10, 2011 of the Municipal
Trial Court in Cities of Bacolod City, Branch 4 (MTCC) in Civil Case No. SCC-
1436, a small claims case for sum of money against respondent
Emma Mondejar (respondent).
The Facts
On March 23, 2011, petitioner filed a complaint 5 for sum of money under
the Rule of Procedure for Small Claims Cases 6 before the MTCC, seeking to
collect from respondent the amount of P23,111.71 which represented her unpaid
water bills for the period June 1, 2002 to September 30, 2005. 7SAHEIc
Petitioner claimed that it was duly authorized to supply water to and collect
payment therefor from the homeowners of Regent Pearl Subdivision, one of
whom is respondent who owns and occupies Lot 8, Block 3 of said subdivision.
From June 1, 2002 until September 30, 2005, respondent and her family
consumed a total of 1,150 cubic meters (cu. m.) of water, which upon application
of the agreed rate of P113.00 for every 10 cu. m. of water, plus an additional
charge of P11.60 for every additional cu. m. of water, amounted to
P28,580.09. 8 However, respondent only paid the amount of P5,468.38, thus,
leaving a balance of P23,111.71 which was left unpaid despite petitioner's
repeated demands. 9
In defense, respondent contended that since April 1998 up to February 2003, she
religiously paid petitioner the agreed monthly flat rate of P75.00 for her water
consumption. Notwithstanding their agreement that the same would be adjusted
only upon prior notice to the homeowners, petitioner unilaterally charged her
unreasonable and excessive adjustments (at the average of 40 cu. m. of water
per month or 1.3 cu. m. of water a day) far above the average daily water
consumption for a household of only 3 persons. She also questioned the
propriety and/or basis of the aforesaid P23,111.71 claim. 10
In the interim, petitioner disconnected respondent's water line for not paying the
adjusted water charges since March 2003 up to August 2005. 11
The MTCC Ruling
On June 10, 2011, the MTCC rendered a Decision 12 holding that since petitioner
was issued a Certificate of Public Convenience (CPC) 13 by the National Water
Resources Board (NWRB) only on August 7, 2003, then, it can only charge
respondent the agreed flat rate of P75.00 per month prior thereto or the sum of
P1,050.00 for theperiod June 1, 2002 to August 7, 2003. Thus, given that
respondent had made total payments equivalent to P1,685.99 for the same
period, she should be considered to have fully paid petitioner. 14 HScCEa
The MTCC disregarded petitioner's reliance on the Housing and Land Use
Regulatory Board's (HLURB) Decision 15 dated August 17, 2000 in HLURB Case
No. REM C6-00-001 entitled Nollie B. Apura, et al. v. Dona Carmen I
Subdivision, et al., as source of its authority to impose new water consumption
rates for water consumed from June 1, 2002 to August 7, 2003 in the absence of
proof (a) that petitioner complied with the directive to inform the HLURB of the
result of its consultation with the concerned homeowners as regards the rates to
be charged, and (b) that the HLURB approved of the same. 16
Moreover, the MTCC noted that petitioner failed to submit evidence
showing (a) the exact date when it actually began imposing the NWRB approved
rates; and (b) that the parties had a formal agreement containing the terms and
conditions thereof, without which it cannot establish with certainty respondent's
obligation. 17Accordingly, it ruled that the earlier agreed rate of P75.00 per month
should still be the basis for respondent's water consumption charges for
the period August 8, 2003 to September 30, 2005. 18 Based on petitioner's
computation, respondent had only paid P300.00 of her P1,500.00 obligation for
said period. Thus, it ordered respondent to pay petitioner the balance thereof,
equivalent to P1,200.00 with legal interest at the rate of 6% per annum from date
of receipt of the extrajudicial demand on October 14, 2010 until fully paid. 19
Aggrieved, petitioner filed a petition for certiorari 20 under Rule 65 of the Rules of
Court before the RTC, ascribing grave abuse of discretion on the part of the
MTCC in finding that it (petitioner) failed to establish with certainty respondent's
obligation, and in not ordering the latter to pay the full amount sought to be
collected.AHDacC
In view of the foregoing, the Court thus finds that petitioner correctly availed of
the remedy of certiorari to assail the propriety of the MTCC Decision in the
subject small claims case, contrary to the RTC's ruling.
Likewise, the Court finds that petitioner filed the said petition before the proper
forum (i.e., the RTC). To be sure, the Court, the Court of Appeals and the
Regional Trial Courts have concurrent jurisdiction to issue a writ
of certiorari. 31 Such concurrence of jurisdiction, however, does not give a party
unbridled freedom to choose the venue of his action lest he ran afoul of the
doctrine of hierarchy of courts. Instead, a becoming regard for judicial hierarchy
dictates that petitions for the issuance of writs of certiorari against first level
courts should be filed with the Regional Trial Court, and those against the latter,
with the Court of Appeals, before resort may be had before the Court. 32 This
procedure is also in consonance with Section 4, Rule 65 of the Rules of Court. 33
Hence, considering that small claims cases are exclusively within the jurisdiction
of the Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial
Courts, and Municipal Circuit Trial Courts, 34 certiorari petitions assailing its
dispositions should be filed before their corresponding Regional Trial Courts.
This petitioner complied with when it instituted its petition for certiorari before the
RTC which, as previously mentioned, has jurisdiction over the same. In fine, the
RTC erred in dismissing the said petition on the ground that it was an improper
remedy, and, as such, RTC Case No. 11-13833 must be reinstated and
remanded thereto for its proper disposition. AHCcET