G.R. No. L-55687 July 30, 1982

JUASING HARDWARE, petitioner, vs.THE HONORABLE RAFAEL T. MENDOZA, Judge of the Court of First Instance of Cebu, and PILAR DOLLA, respondents.

Luis V. Diones, Paulito Y. Cabrera and Victor C. Laborte for petitioner.

Amadeo D. Seno for respondents.

 

GUERRERO, J.:

In this special civil action for certiorari, petitioner Juasing Hardware seeks to annul the Orders of respondent Judge dated September 5, 1980 and October 21, 1980 issued in Civil Case No. R-18386.

Records show the pertinent factual and procedural antecedents of the instant Petition to be as follows:

On August 17, 1979, Juasing Hardware, alleging to be a single proprietorship duly organized and existing under and by virtue of the laws of the Philippines and represented by its manager Ong Bon Yong, filed a complaint for the collection of a sum of money against Pilar Dolla. 1 The complaint charged that defendant Dolla failed and refused to pay, despite repeated demands, the purchase price of items, materials and merchandise which she bought from the plaintiff. 2 In her Answer, defendant stated, among others, that she "has no knowledge about plaintiff's legal personality and capacity to sue as alleged in ... the complaint." 3 The case proceeded to pre-trial and trial. After plaintiff had completed the presentation of its evidence and rested its case, defendant filed a Motion for Dismissal of Action (Demurrer to Evidence) 4 praying that the action be dismissed for plaintiff's lack of legal capacity to sue. Defendant in said Motion contended that plaintiff Juasing Hardware is a single proprietorship, not a corporation or a partnership duly registered in accordance with law, and therefore is not a juridical person with legal capacity to bring an action in court. Plaintiff filed an Opposition and moved for the admission of an Amended Complaint. 5

Resolving the foregoing controversy, respondent Judge issued the Order dated September 5, 1980 dismissing the case and denying admission of the Amended Complaint. Pertinent portions of said Order follow:

The Answer of the defendant to the complaint alleged the lack of legal capacity to sue of the plaintiff as contained in its affirmative defense. inspite of the allegation that plaintiff has no legal capacity to sue, the plaintiff insisted in proceeding to trial instead of amending the Complaint. During the trial, it was found out that the affirmative defense of defendant of plaintiff's lack of legal capacity to sue is very evident for plaintiff Juasing Hardware is a single proprietorship which is neither a partnership nor a corporation. The amendment therefore ' is now too late it being substantial.

In view of all the foregoing, this case is hereby DISMISSED with costs de oficio. 6

Plaintiff's Motion for Reconsideration of the above Order was denied in another Order issued by respondent Judge on October 21, 1980. 7

The sole issue in this case is whether or not the lower court committed a grave abuse of discretion when it dismissed the case below and refused to admit the Amended Complaint filed by therein plaintiff, now herein petitioner, Juasing Hardware.

Rule 3 of the Revised Rules of Court provides as follows:

Sec. 1. Who may be parties.-Only natural or juridical persons or entities authorized by law may be parties in a civil action.

Petitioner is definitely not a natural person; nor is it a juridical person as defined in the New Civil Code of the Philippines thus:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law;

(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member.

Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court.

Thus, the complaint in the court below should have been filed in the name of the owner of Juasing Hardware. The allegations in the body of the complaint would show that the suit is brought by such person AS proprietor or owner of the business conducted under the name and style Juasing Hardware". The descriptive words "doing business as Juasing Hardware' " may be added in the title of the case, as is customarily done.

Be that as it may, petitioner's contention that respondent Judge erred in not allowing the amendment of the complaint to correct the designation of the party plaintiff in the lower court, is impressed with merit. Such an amendment is authorized by Rule 10 of the Revised Rules of Court which provides thus:

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Sec. 4. Formal Amendments. — A defect in the designation of the parties may be summarily corrected at any stage of the action provided no prejudice is caused thereby to the adverse party. (Emphasis supplied.)

Contrary to the ruling of respondent Judge, the defect of the complaint in the instant case is merely formal, not substantial. Substitution of the party plaintiff would not constitute a change in the Identity of the parties. No unfairness or surprise to private respondent Dolla, defendant in the court a quo, would result by allowing the amendment, the purpose of which is merely to conform to procedural rules or to correct a technical error.

In point is the case of Alonzo vs. Villamor, et al. 8 which applied Sec. 110 of the Code of Civil Procedure authorizing the court "in furtherance of justice ... (to) allow a party to amend any pleading or proceeding and at any stage of the action, in either the Court of First Instance or the Supreme Court, by adding or striking out the name of any party, either plaintiff or defendant, or by correcting a mistake in the name of a party ..." In the Alonzo case, Fr. Eladio Alonzo, a priest of the Roman Catholic Church, brought an action to recover from therein defendants the value of certain properties taken from the Church. The defendants contended that Fr. Alonzo was not the real party in interest. This Court, speaking through Justice Moreland, ordered the substitution of the Roman Catholic Apostolic Church in the place and stead of Eladio Alonzo as party plaintiff, and aptly held in this wise:

... Defect in form cannot possibly prejudice so long as the substantial is clearly evident. ...

No one has been misled by the error in the name of the party plaintiff. If we should by reason of this error send this case back for amendment and new trial, there would be on the retrial the same complaint, the same answer, the same defense, the same interests, the same witnesses, and the same evidence. The name of the plaintiff would constitute the only difference between the old trial and the new. In our judgment there is not enough in a name to justify such action.

There is nothing sacred about processes or pleadings, their forms or contents. Their sole purpose is to facilitate the application of justice to the rival claims of contending parties. They were created, not to hinder and delay, but to facilitate and promote, the administration of justice. They do not constitute the thing itself, which courts are always striving to secure to litigants. They are designed as the means best adapted to obtain that thing. In other words, they are a means to an end. When they lose the character of the one and become the other, the administration of justice is at fault and courts are correspondingly remiss in the performance of their obvious duty.

The error in this case is purely technical. To take advantage of it for other purposes than to cure it, does not appeal to a fair sense of justice. Its presentation as fatal to the plaintiff's case smacks of skill rather than right. A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is, rather, a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike

duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested rights in technicalities. No litigant should be permitted to challenge a record of a court ... for defect of form when his substantial rights have not been prejudiced thereby. 9

We reiterate what this Court had stated in the more recent case of Shaffer vs. Palma 10 that "(t)he courts should be liberal in allowing amendments to pleadings to avoid multiplicity of suits and in order that t he real controversies between the parties are presented and the case decided on the merits without unnecessary delay." 11 This rule applies with more reason and with greater force when, as in the case at bar, the amendment sought to be made refers to a mere matter of form and no substantial rights are prejudiced. 12

WHEREFORE, the Petition is hereby granted. The Orders dated September 5, 1980 and October 21, 1980 are hereby annulled and the lower court is hereby ordered to admit the Amended Complaint in conformity with the pronouncements in this Decision. No costs.

SO ORDERED.

Barredo (Chairman), Concepcion, Jr., Abad Santos, and De Castro, JJ., concur.

Escolin, J., concur in the result. 

Separate Opinions

AQUINO, J., concurring:

I concur. It should appear in the amended complaint (a copy which was not attached to the petition) that the plaintiff is Ong Hua or Huat, doing business under the tradename, Juasing Hardware, and in the body of the complaint the personal circumstances of Ong Hua should be stated.

 

 

Separate Opinions

AQUINO, J., concurring:

I concur. It should appear in the amended complaint (a copy which was not attached to the petition) that the plaintiff is Ong Hua or Huat, doing business under the tradename, Juasing Hardware, and in the body of the complaint the personal circumstances of Ong Hua should be stated.

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G.R. No. L-26768 October 30, 1970

FAUSTINO GOJO, petitioner-appellant, vs.SEGUNDO GOYALA and ANTONINA ALMOGUERA, respondents-appellees.

Fernando P. Gerona, Sr. for petitioner-appellant.

Agustin Frivaldo for respondents-appellees.

 

BARREDO, J.:.

Appeal from the favorable decision of the Court of First Instance of Sorsogon on the counterclaim of respondents (herein appellees) in its Civil Case No. 1657-84 — the complaint (petition) of therein petitioner (herein appellant) having beet previously dismissed, without prejudice, for his failure to submit an amended complaint as required of him in the court a quo's earlier order.

The record shows that on 26 May 1951, appellee Segundo, Goyala together with his now deceased wife Antonina Almoguera, who was also named respondent or defendant in the complaint or petition in the court below, sold to appellant by a "Deed of Pacto de Retro Sale" a certain parcel of agricultural land having an area of approximately two and one-half hectares for P750.00, the repurchase to be made, according to the deed, within one year. It also appears from said deed that on July 4, 1951, the vendee paid another P100.00 as addition to the purchase price. About ten (10) years after the execution of the said document, or on April 12, 1961, to be precise, the vendee filed with the Court of First Instance of Sorsogon the present case against the vendors by way of a petition for consolidation of ownership of the land described and involved in the "Deed of Pacto de Retro Sale." In his petition, the vendee, herein appellant, alleged, inter alia, that the date for repurchase, May 26, 1952, having expired and the vendors not having been able to repurchase the same under the terms and conditions of the agreement, the ownership over the land involved had become consolidated in him; and that for the purpose of recording in the Registry of Property the said consolidation of ownership, it was necessary that a judicial order be issued to that effect and accordingly prayed for such an order.

On May 26, 1961, appellee Segundo Goyala filed an opposition or answer to the petition. He therein alleged that his wife Antonina Almoguera had died in the year 1959 and denied the allegation in the petition regarding the pacto de retro sale, "the fact of the matter being," according to him, "that on May 26, 1951, the respondents obtained a cash load of P750.00 from the petitioner payable in one year without interest; that only on July 26, 1951, Dolores Goyala, daughter of the respondents, obtained from the petitioner the sum of P50.00 to be added and credited to the account of the respondents; and then on August 25, 1951, the said Dolores Goyala received from the petitioner another amount of P10.00 to be added to and credited to the account of the respondents, (so that) the total loan of the respondents from the petitioner aggregates P810.00 Philippine Currency" and that to guarantee the payment of the said loan, the respondents executed a mortgage in favor of the petitioner on a parcel of coconut land described in Annex A of the petition, hence, altho the deed was executed or drawn in the form of

a pacto de retro sale, the true and real intention of the parties thereto was that the same was a mere mortgage to secure the payment of the original loan of P750.00 together with the additional amount received thereafter, making a total loan of P810.00, payable within, one year without interest. He further alleged that in the evening of May 26, 1952, he and his wife went to the house of the petitioner and tendered to him the sum of P810.00 to pay the debt, but said petitioner refused to receive the same and to cancel the document of mortgage, Annex A. The said appellee also reiterated by way of counterclaim the foregoing allegations of his answer and prayed thus:.

WHEREFORE, the respondent Segundo Goyala respectfully prays this Honorable Court to dismiss the petition and render judgment in favor of the respondents as follows:.

(a) Ordering the petitioner to receive the sum of P810.00 tendered or deposited by the respondents in full settlement of their debts to him;

(b) Declaring the document marked Annex A of the petition to be mortgage and not a pacto de retro sale, and ordering the same cancelled and with no more force and effect;

(c) Ordering the petitioner to pay the respondents the sum of P1,800.00 per annum beginning May 26, 1951 until the final termination of this case as the reasonable monetary value of the products for the said property, and from this amount, there should be deducted however, the corresponding legal interest annually on said loans; and

(d) In case, however, of the remote possibility that this Court should find the said instrument (Annex A) to be a true pacto de retro sale, and not a mere mortgage, it is hereby prayed that the petitioner be ordered to execute a deed of resale or repurchase of said property in favor of the respondents in accordance with Art. 1606 third paragraph of the Civil Code."

On December 1, 1962, counsel for respondent Goyala filed a manifestation informing the trial court that the named defendant (respondent) Antonina Almoguera was already dead, she having died at Labo, Camarines Norte on March 27, 1959, and that her surviving nearest kin are her children, namely: Leonor, Pedro, Juliana, Dolores, Valentina, Soledad, Penya, Mamerta, Salvador, Genesa, Felipe, Elegio — all surnamed Goyala — with residences at Bulan, Sorsogon. Hearing was had on that manifestation, after which the trial court, under date of December 4, 1962, issued the following order:.

As prayed for in the manifestation of Atty. Agustin Frivaldo counsel for the defendant, dated December 1, 1962, on the ground stated therein, the counsel for the plaintiff is hereby required to submit an amended Complaint substituting therein for one of the defendants, Antonina Almoguera, now

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deceased her successors in interest as party defendants, within the reglementary period.

Subsequently, on January 26, 1963, appellee Goyala filed a motion to dismiss the complaint or petition on the ground that notwithstanding the lapse of 43 days after appellant's receipt of a copy of the above-quoted order of the trial court, said appellant had failed and neglected to submit the amended complaint required of him. The motion was opposed by appellant; and the trial court, resolving the incident, issued the following order on February 15, 1963:.

The matter under consideration is the motion to dismiss filed by the defendants on the ground that the plaintiff has failed and neglected to submit the amended complaint as required in the order of this Court dated December 4, 1962, which the plaintiff has received on December 18, 1962. From December 13, 1962 when the motion to dismiss was filed, 43 days have elapsed. On February 6, 1963 when the plaintiff has again failed to file together with said opposition the required amended complaint, and although plaintiff has requested for a reasonable extension of time within which to file the said pleading, it is regretable to state that up to the present has neglected to do so.

WHEREFORE, the complaint is hereby dismissed without prejudice.

Thereafter, on July 10, 1963, appellee filed a motion to declare appellant in default in respect of said appellee's counterclaim, contained in his answer (opposition) to the dismissed complaint petition) of appellant. This motion was granted by the trial court in its order of July 11, 1963, to wit:.

Upon petition of the counsel for the defendant Segundo Goyala to declare the plaintiff in default on the ground of failure on the part of the plaintiff to answer the counterclaim filed by said defendant Segundo Goyala within the reglementary period, despite the fact that the plaintiff's counsel was duly served with a copy thereof, and the plaintiff's complaint was already dismissed by this Court in its order of February 15, 1963 on the ground of neglect to submit the amended complaint as required in the Court order of December 4, 1962, the plaintiff is hereby declared in default on the counterclaim filed by said defendant Segundo Goyala.

Let the defendant Segundo Goyala submit his evidence before the Clerk of Court, who is hereby commissioned to receive the same.

As directed in the order above-quoted, the Clerk of Court received the evidence of appellee in respect of his counterclaim and, thereafter, on November 15, 1963 the trial court rendered favorable judgment on appellee's counterclaim. The pertinent portions of the decision referred to read thus:.

It appears that on May 26, 1951, respondents obtained a loan of P750.00 from the petitioner. To secure the loan, respondents executed a document, which was made a Deed of Pacto de Retro Sale (Exh. "A"), on suggestion of petitioner to exempt himself from liabilities under the Usury Law. Dolores Goyala, one of the daughters of respondents, obtained an additional loan of

P50.00 on July 26, 1951, (Exh. "A-1") and another P10.00 on August 19, 1951, (Exh. "A-3") from the petitioner which amounts were duly authorized and acknowledged by respondent Segundo Goyala. In the late afternoon of May 26, 1952, the last day to redeem the property, Segundo Goyala, tendered the amount of P810.00 to herein petitioner in complete payment of the loan and to release the property securing the said loan, but was refused because it was already night time, and was advised instead to return the following day. When Segundo Goyala returned the following day to redeem the property he was told by petitioner that the period to redeem has already expired. Segundo Goyala testified further that he tried no less than three times to redeem the property but each time petitioner refused the redemption money.

It appears further that the petitioner is in possession of the land since May 26, 1951, after the execution of Exhibit "A" up to the present time and had appropriated to himself the products during the period. It is shown further that the land is a productive coconut land and has a fair market value of P5,000.00 with an annual yield of P1,800.00.

The respondents are not however entitled to be reimbursed of the value of the products obtained by the petitioner who acted in the belief that the agreement was a Pacto de Retro Sale which turned out to be otherwise as the Court now so declares.

WHEREFORE, in view of the foregoing the Court hereby declares the Deed of Pacto de Retro Sale (Exh. "A") an equitable mortgage and respondents Segundo Goyala and the heirs of Antonina Almoguera are allowed to redeem the property; orders Faustino Gojo to withdraw the amount of P810.00 deposited with the Clerk of Court in full settlement of the loan, and hereby cancels and declares without force and effect the aforementioned Deed of Pacto de Retro Sale executed by the spouses Segundo Goyala and Antonina Almoguera in favor of Faustino Gojo. Without costs.

The above-quoted decision was subsequently amended in an order of December 19, 1963, as follows:.

It appearing that in the dispositive part of the decision there was no directive to restore the possession to the defendants upon execution, the dispositive portion of the said decision is hereby amended to include therein an additional directive ordering the plaintiff to deliver and restore the possession of the land in question to the defendants.

Dissatisfied with the decision referred to, appellant appealed to the Court of Appeals which upon its finding that the said appeal involves purely questions of law, certified the same to this Court for resolution.

In his brief, appellant assigns the following errors allegedly committed by the trial court:.

1. THE LOWER COURT ERRED IN DECLARING PLAINTIFF IN DEFAULT WITH RESPECT TO DEFENDANT'S COUNTERCLAIM;

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2. THE LOWER COURT ERRED IN DEPUTIZING OR COMMISSIONING THE CLERK OF COURT TO RECEIVE THE EVIDENCE OF THE DEFENDANT SEGUNDO GOYALA;

3. THE LOWER COURT ERRED IN RENDERING JUDGMENT IN FAVOR OF THE RESPONDENT SEGUNDO GOYALA AND THE HEIRS OF ANTONINA ALMOGUERA ALLOWING THEM TO REDEEM THE LAND IN QUESTION FROM THE PETITIONER FAUSTINO GOJO FOR THE SUM OF P810.00.

The thrust of appellant's argument in respect of the first assignment of error is to the effect that there is no occasion for the trial court to declare him in default in respect of appellee's counterclaim in this case, for the reasons that: (a) the said counterclaim "falls within the category of compulsory counterclaim" which does not call for an independent answer as the complaint already denies its material allegations; and (b) the dismissal of the complaint in this case without prejudice carried with it the dismissal of the said counterclaim.

The first assignment of error of appellant is well taken. It is now settled that a plaintiff who fails or chooses not to answer a compulsory counterclaim may not be declared in default, principally because the issues raised in the counterclaim are deemed automatically joined by the allegations of the complaint.1 In the instant case, there can be no doubt that appellant's counterclaim was a compulsory one in as much as it arises out of or is necessarily connected with transaction or occurrence that is the subject matter of the complaint; the complaint alleged that the right of appellee to repurchase the property in question had already expired and asked for an order of consolidation; on the other hand, appellant's counterclaim was for reformation of the deed claiming that it was only a mortgage. Thus the counterclaim was clearly inconsistent with and directly controverted; the whole theory and basic allegations of the complaint. In consequence, appellant's complaint stood as the answer to appellee's counterclaim; hence, the incorrectness of the trial court's order declaring the appellant in default in regard to said counterclaim is evident.

Regarding the dismissal of petitioner's complaint, We hold also, that the trial court committed reversible error in ordering the same. It is true that under Section 3 of Rule 17, a complaint may be dismissed for failure to prosecute if the plaintiff fails to comply with an order of the court, but it is obvious that the said provision cannot apply when the order supposedly ignored is a void one, as in this case. Here, the trial court ordered petitioner to amend the complaint only because it was informed that one of the defendants had died, the court directing that the plaintiff should name the heirs of the deceased as defendants in lieu of said deceased. Such an order runs counter to the ruling of this Court in Caseñas vs. Resales, et al. 2 which is squarely applicable to the Situation herein obtaining. In that case, We held:.

When certain of the parties to Civil Case No. 261 died and due notice thereof was given to the trial court, it devolved on the said court to order, not the amendment of the complaint, but the appearance of the legal representatives of the deceased in accordance with the procedure and manner outlined in Rule 3, Section 17 of the Rules of Court, which provide:.

"SECTION 17. Death of party. — After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the

deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs."

In the case of Barrameda vs. Barbara, 90 Phil. 718, this Court held that an order to amend the complaint, before the proper substitution of parties as directed by the aforequoted rule has been effected, is void and imposes upon the plaintiff no duty to comply therewith to the end that an order dismissing the said complaint, for such non-compliance, would similarly be void. In a subsequent case, Ferriera, et al. vs. Gonzales, et al., G.R. No. L-11567, July 17, 1958, this Court affirmed a similar conclusion on the determination that the continuance of a proceedings during the pendency of which a party thereto dies, without such party having been validly substituted in accordance with the rules, amounts to a "lack of jurisdiction".

The facts of this case fit four square into the Barrameda case above-cited, save for the minor variance that in the former two of the litigants died while only one predeceased the case in Barrameda. Here, as in Barrameda, during the pendency of (the) civil case, notice was given to the trial court of the deaths of one of the plaintiffs and one of the defendants in it. Instead of ordering the substitution of the deceased's legal representatives in accordance with Rule 3, Sec. 17 of the Rules of Court, the trial court directed the surviving plaintiff to amend the complaint and when the latter failed to comply therewith, the said court dismissed the complaint for such non-compliance. We must hold, therefore, as We did in Barrameda that inasmuch as there was no obligation on the part of the plaintiff-appellant herein to amend his complaint in Civil Case No. 261, any such imposition being void, his failure to comply with such an order did not justify the dismissal of his complaint. Grounded as it was upon a void order, the dismissal was itself void." (To the same effect, see World Wide Insurance & Surety Co. v. Jose, etc., et al., 96 Phil. 45, 50).

Besides, in line with the principle underlying Sec. 2 of Rule 17, it is not proper to dismiss a complaint when a compulsory counterclaim has been pleaded by defendant. The reason is obvious. Under the cited provision, the right of the plaintiff to move for the dismissal of an action after the defendant has filed his answer is qualified by the clause providing that: "If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court." With this limitation, the power of the court to dismiss the complaint upon motion of plaintiff, which is usually without prejudice, is not purely discretionary.3 The purpose is to avoid multiplicity of suits over the same matter which would necessarily entail unnecessary expense and, what is worse, possibility of

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conflict and inconsistency in the resolution of the same questions. The same considerations would obtain, if the defendant were the one to ask for dismissal. The best interests of justice require that conflicting claims regarding the same matter should be decided in one single proceeding. Dismissing the complaint without prejudice, as the trial court has done in this case, albeit upon motion of the defendant, will not prevent the undesirable multiplication of suits and reventilation of the same issues in the subsequent action that may be filed by virtue of the reservation made in the disputed order of dismissal.

Having arrived at the foregoing conclusions, it becomes unnecessary to discuss the other two assigned errors.

WHEREFORE, the decision appealed from is set aside and this case is remanded to the court below for further proceedings in consonance with the above opinion, with costs against appellee.

Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and Makasiar, JJ., concur.

Villamor, J., took no part.

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G.R. No. L-21766             September 30, 1966

FELICISIMA BALLECER and JOSE S. AGAWIN, petitioners, vs.JOSE BERNARDO, The Hon. JESUS P. MORFE, Presiding Judge, Branch XIII of the Court of First Instance of Manila, and the Sheriff of Manila, respondents.

Rosendo N. Feleo for petitioners.Tecson, Bernardo and Berba for respondents.

 

CONCEPCION, C.J.:

          This is an original action to set aside several orders of the Court of First Instance of Manila, in Civil Case No. 43073 thereof, as well as an alias writ of execution and a notice of sale issued in connection therewith. Upon the filing of the petition and the submission and approval of a bond in the sum of P1,000.00, on motion of petitioners herein, we issued a writ of preliminary injunction enjoining respondent Judge and the Sheriff of Manila from carrying out the aforementioned writ of execution.

          Petitioners herein are the spouses Jose S. Agawin and Felicisima Ballecer. On May 4, 1960, they instituted, said Civil Case No. 43073 against respondent Jose Bernardo, to recover damages allegedly caused by him in consequence of the destruction and demolition of a portion of a wall of the petitioners, along the common boundary line of their lot and that of Bernardo, at Felix Huertas Street, Manila, as well as to recover possession of a portion of petitioners' aforementioned lot, with an area of 0.80 square meters, which was allegedly encroached upon by the wall subsequently erected by Bernardo in place of the one he had destroyed.

          In due course, Bernardo filed his answer denying petitioners' averments, and alleging, in turn, that the demolition and destruction made by him had taken place within the boundary of his own property. By way of counterclaim, Bernardo set up two (2) causes of action, namely: (1) that petitioners were the parties who had encroached upon and occupied a portion of Bernardo's property, with an area of about 3.70 square meters, without his consent and against his will, and (2) that petitioners' complaint is premature, uncalled for, capricious and without any justifiable cause, for which reason Bernardo prayed that they be sentenced to vacate his aforementioned portion of land allegedly encroached upon by them and to turn it over to him, and to pay damages aggregating P48,000.00.

          On the last day of the reglementary period to answer the counterclaim, or on June 6, 1960, petitioners filed ex parte urgent motion for extension of time therefor, but on June 11 the motion was denied and ordered stricken off the record. Then, on June 13, the court declared petitioners in default as to the counterclaim and ordered Bernardo to present his evidence thereon before the Deputy Clerk of Court on June 15, at 9: 00 a.m., which Bernardo did. On June 20, the court rendered a decision the dispositive part of which reads:

          WHEREFORE, the Court hereby renders judgment on the counterclaim in favor of the defendant-counterclaimant and against the plaintiffs, as follows:

1. Ordering the plaintiffs and/or their agents and representatives including all persons claiming under them to deliver and restore the possession thereof to the defendant, that portion of said defendant's property consisting of 3.7 square meters which is being encroached upon and occupied by or in possession of the plaintiffs;

2. Ordering plaintiffs to pay, jointly and severally, the defendant the following sums, to wit:

(a) P3,625.00 as compensatory damages which the defendant failed to realize in the form of rentals from that portion of his property subject matter of the counterclaim, corresponding to the period from May, 1948 to May, 1960, with interest thereon at the legal rate from the date of filing of the answer with counterclaim until fully paid; plus the sum of P25.00 for each month thereafter until the premises in question are actually delivered to the possession and occupation of the defendant;

(b) P541.00 as actual damages incurred by the defendant;

(c) P10,000.00 as moral damages;

(d) P2,000.00 as exemplary damages; and

(e) P1,000.00 as attorney's fees.

          With costs against the plaintiffs.

          On June 28, petitioners moved for a reconsideration of the orders of June 11 and 13, but the motion was denied on July 1. Thereupon, petitioners filed a petition for relief from judgment, with a prayer for a writ of preliminary injunction, to restrain the Clerk of Court from issuing a writ of execution. After denying this petition, the Court, on petitioner's motion for reconsideration, granted it on January 18, 1961, only to deny it once more, on February 4, on motion for reconsideration filed by Bernardo. Forthwith, or on February 8, petitioners filed their notice of appeal. Soon thereafter, petitioners sought an extension of time to file their appeal bond and their record on appeal, but the motion was denied, on February 18, for lack of merit. On March 18, the Court ordered the issuance of a writ of execution, but, on April 11, the execution of the decision of June 20, 1960, was ordered stayed pending trial on the merits on petitioners' complaint.

          On motion of Bernardo, dated December 19, 1962, said order was, on January 29, 1963, set aside and the issuance of a writ of execution "only as to paragraph No. 1 and paragraph No. 2-a of the dispositive part" of the aforementioned decision, was ordered. A reconsideration of this order having been denied, the Clerk of Court issued an alias writ of execution and, in pursuance thereof, the Sheriff of Manila caused to be published a notice of sale at public auction of a property of petitioners herein. Hence, the present case against Bernardo, the Judge of the lower court and the Sheriff of Manila.

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          The main question for determination in this case is whether the lower court has gravely abused its discretion in declaring the petitioners in default and in rendering judgment against them on Bernardo's counterclaim after an ex parte hearing. It is obvious that the answer must be in the affirmative.1awphîl.nèt

          To begin with, a motion for extension of time to file an answer to the counterclaim had been filed within the reglementary period and plausible reasons were given in support thereof: counsel for petitioners had been unable to contact them owing to a typhoon that had just hit Manila, and the flood and inclement weather that had followed.

          The main reason for the lower court's adverse action thereon would seem to be petitioners' failure to set it for hearing as provided in the Rules of Court. But, there are motions that may be heard and granted ex parte, and petitioners' aforementioned motion belongs to such class. Thus in Moya v. Barton (76 Phil. 831, 833) it was held:

          With respect to the other ground, Section 2 of Rule 27 provides that "every motion other than one which may be heard ex-parte . . . . shall be filed with the Court, and served upon the parties affected thereby." Taking into consideration that the extension of time applied for may be shorter than the time required to have a motion set for hearing and acted on by the court, and that the court has, as above stated, discretion to grant the petition, the motion for extension filed in the present case may be considered as one which may be heard ex-parte. . . . .."

          What is more, Bernardo's counterclaim was predicated upon allegations of fact which are inconsistent with, and, hence, controverted by, the allegations in petitioners' complaint. In this connection, it should be noted that Bernardo had, according to the complaint, encroached upon petitioners' property, whereas Bernardo maintained the exact opposite in his counterclaim — not only that petitioners' allegation was not true, but, also, that they were the ones encroaching upon the property of Bernardo. Certainly, this contention, of Bernardo can not be decided without passing upon the truth of the allegations in the complaint, which petitioners are entitled to prove, whether they had answered Bernardo's counterclaim or not. In other words, the issues raised in the counterclaim were inseparable from those posed in the complaint, and so it was not absolutely necessary for the petitioners to file an answer to the counterclaim (Arejola vs. Cayetano, L-6673, Sept. 8, 1954; Rosario vs. Martinez, L-4473, Sept. 30, 1952). In the language of Mr. Justice Reyes (J.B.L.), speaking for the Court in Navarro v. Bello (54 O.G. 6588):

          There was no need for petitioners to answer respondents' counterclaim, considering that plaintiffs, in their complaint, claimed not only ownership of, but also the right to possess, the parcels in question, alleging that sometime in May, 1954, defendants, through force and intimidation, wrested possession thereof from their tenants, and that it was upon a writ of possession issued by the Court of First Instance of Pangasinan that they were placed back in possession by the provincial sheriff. These averments were denied by defendants in their answer, wherein they asserted ownership in themselves and illegal deprivation of their possession by plaintiffs, and as counterclaim, prayed for damages allegedly suffered because of plaintiffs' alleged usurpation of the premises.

          It thus appears that the issues of the counterclaim are the very issues raised in the complaint and in the answer, and said counterclaim is based on the very defenses pleaded in the answer. To answer such counterclaim would require plaintiffs to replead the same facts already alleged in their complaint.1awphîl.nèt

          But in any event, whether or not plaintiffs have answered defendants' counterclaim, they have the right to prove the averments of their complaint, including their claim that it was by court order that they secured possession of the parcels in question from defendants. And if plaintiffs are able to prove such allegations, then the court must dismiss defendants' counterclaim for damages, since the illegal usurpation of defendants' possession allegedly committed by plaintiffs, which is the basis of the counterclaim, would not have been proved. In short, the issues of the counterclaim are so inseparable from those of the complaint and the answer that such counterclaim partakes of the nature of a special defense which, even if not specifically challenged by plaintiffs in a reply, is deemed controverted (Rule 11, Sec. 1, Rules of Court; Rosario v. J. Martinez, L-4473, September 30, 1952; Lama v. Apacible, 79 Phil. 68). There was, therefore, no occasion for plaintiffs' default on defendants' counterclaim, and the order of the court below declaring them in default, as well as the judgment by default, is improper and void.

          The lower court committed, therefore, a grave abuse of discretion, amounting to excess of jurisdiction, in declaring the petitioners in default as regards the counterclaim, and in rendering a decision in default against them on said counterclaim, and, as a consequence, said decision is null and void, and so are the aforementioned writ of execution, alias writ of execution, and notice of sale issued by the Sheriff in pursuance thereof.

          WHEREFORE, the orders complained of, as well as said writ of execution and alias writ of execution, and the notice of sale adverted to above, including the decision of June 20, 1960, are hereby annulled and set aside, and the writ of preliminary injunction heretofore issued by this Court is, accordingly, made permanent, with costs against herein respondent Jose Bernardo. It is so ordered.

Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.Barrera, J., is on leave.

8

G.R. No. L-46000 March 18, 1985

GLICERIO AGUSTIN (Deceased) as Administrator of the Intestate Estate of Susana Agustin, petitioner-plaintiff-appellant, vs.LAUREANO BACALAN and the PROVINCIAL SHERIFF OF CEBU, respondents-defendants-appellees.

 

GUTIERREZ, JR., J.:

The precursor of this case was a complaint for ejectment with damages filed by plaintiff-appellant Agustin, as adininistrator of the Intestate Estate of Susana Agustin, against defendant-appellee Bacalan, before the City Court of Cebu.

Bacalan is a lessee of a one-door ground floor space in a building owned by the late Susana Agustin. Due to nonpayment of rentals despite repeated demands an action to eject him was filed.

In his complaint, the plaintiff-appellant prayed that the defendant-appellee be ordered to immediately vacate the place in question, to pay plaintiff-appellant the sum of P2,300.00 representing arrearages in rentals plus the corresponding rentals until he actually vacates the place, attorney's fees, expenses, and costs.

In his answer, the defendant-appellee included a counter-claim alleging that the present action was "clearly unfounded and devoid of merits, as it is tainted with malice and bad faith on the part of the plaintiff for the obvious reason that plaintiff pretty well knows that defendant does not have any rentals in arrears due to the estate of Susana Agustin, but notwithstanding this knowledge, plaintiff filed the present action merely to annoy, vex, embarrass and inconvenience the defendant." He stated, "That by virtue of the unwarranted and malicious filing of this action by the plaintiff against the defendant, the latter suffered, and will continue to suffer, actual and moral damages in the amount of no less than P50,000.00; P10,000.00 in concept of exemplary damages. In addition, defendant has been compelled to retain the services of undersigned counsel to resist plaintiffs' reckless, malicious and frivolous claim and to protect and enforce his rights for which he obligated himself to pay the further sum of P3,500.00 as attorney's fees."

The City Court of Cebu subsequently rendered judgment dismissing the counterclaim and ordering the defendant to vacate the premises in question and to pay the plaintiff the sum of P3,887.10 as unpaid back rentals and the sum of P150.00 as attorney's fees' From this decision, the defendant filed an appeal with Branch Ill of the Court of First Instance of Cebu. The case was designated as Civil Case No. R-12430.

Availing of Republic Act 6031 which does away with trials de novo in appeals before it, the Court of First Instance rendered a decision, the dispositive portion of which reads:

WHEREFORE, based on all the foregoing considerations, the appealed judgment is hereby set aside. Judgment is hereby required in favor of the defendant—

1. Ordering the plaintiff to pay.

a) P10,000.00 as moral damages;

b) P5,000.00 as exemplary damages;

c) P1,000.00 as attorney's fees; and

2. With costs against plaintiff.

JUDGMENT REVERSED.

No appeal was taken by the plaintiff-appellant. The decision lapsed into finality and became executory. A writ of execution was issued by virtue of which a notice to sell at public auction real properties belonging to the estate of Susana Agustin was issued by the Deputy Sheriff to satisfy judgment in the case. Plaintiff's counsel filed a motion for reconsideration, confessing his fault and giving the reason why he failed to perfect the appeal on time. The motion was denied.

Thereafter, with the aid of new counsel, the plaintiff-appellant filed a complaint with Branch V, Court of First Instance of Cebu, against the defendant and the Deputy Sheriff of Cebu for the declaration of the nullity of the above-cited decision of Branch III, Court of First Instance of Cebu in the ejectment case on the ground that the exercise of its appellate jurisdiction was null and void from the beginning for the following reasons:

(a) It grants relief in the total sum of P16,000.00 (exclusive of costs) distributed thus:

P10,000.00 as moral damages

P5,000.00 as exemplary damages

P1,000.00 as attorney's fees

which is clearly beyond the jurisdiction of the City Court of Cebu; Section 88 of the Judiciary Act of 1948, as amended by Rep. Acts Nos. 2613 and 3828, limits the jurisdiction of the city courts in civil cases to P10,000.00 as the maximum amount of the demand (exclusive of interest and costs);

(b) Moreover, said Decision (Annex "G") grants moral damages to the defendant in the sum of P10,000.00 which constitutes a grave abuse of discretion amounting to lack of jurisdiction, there being no evidence to support it and the subject matter of the suit in Civil Case No. R-13504 being purely contractual where moral damages are not recoverable.

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A motion to dismiss was filed by the defendant on the grounds that the plaintiff has no cause of action and that the court lacks jurisdiction to declare the nullity of a decision of another branch of the Court of First Instance of Cebu.

While rejecting the second ground for the motion to dismiss, the court sustained the defendant and ruled:

Clearly from a reading of the complaint, the plaintiff seeks the annulment of the decision rendered by the Third Branch of this Court because the award exceeded the jurisdiction amount cognizable by the City Court of Cebu and the said Branch III of this Court has no jurisdiction to award the defendants herein (plaintiff in Civil Case No. 12430) an amount more than P10,000.00;

It is the considered opinion of this Court that this allegation of the herein plaintiff cannot be availed of as a ground for annulment of a judgment. It may perhaps, or at most, be a ground for a petition for certiorari. But then, the remedy should be availed of within the reglementary period to appeal. Nevertheless, even if the plaintiff did take his cause by certiorari, just the same, it would have been futile....

xxx xxx xxx

In fine, this Court believes that the present complaint fails to allege a valid cause of action as the same is only a clear attempt at utilizing the remedy for the annulment of the judgment rendered by this Court in Civil Case No. 12430 to offset the adverse effects of failure to appeal.

Plaintiff-appellant's motion for reconsideration was denied, prompting him to file an appeal before the Court of Appeals, which, in a resolution, certified the same to us on the ground that it involves pure questions of law.

We ruled in Macabingkil v. People's Homesite and Housing Corporation (72 SCRA 326, citing Reyes v. Barretto-Datu, 94 Phil. 446, 448-449)-

Under our rules of procedure, the validity of a judgment or order of the court, which has become final and executory, may he attacked only by a direct action or proceeding to annul the same, or by motion in another case if, in the latter case, the court had no jurisdiction to enter the order or pronounce the judgment (section 44, Rule 39 of the Rules of Court). The first proceeding is a direct attack against the order or judgment, because it is not incidental to, but is the main object of, the proceeding. The other one is the collateral attack, in which the purpose of the proceedings is to obtain some relief, other than the vacation or setting aside of the judgment, and the attack is only an incident. (I Freeman on Judgments, sec. 306, pages 607-608.) A third manner is by a petition for relief from the judgment order as authorized by the statutes or by the rules, such as those expressly provided in Rule 38 of the Rules of Court, but in this case it is to be noted that the relief is granted by express statutory authority in the same action or proceeding in which the judgment or order was entered ...

The question is thus poised, whether or not the present action for the annulment of the judgment in the ejectment case is the proper remedy after it has become final and executory.

To this procedural dilemma, the solution lies in the determination of the validity of the judgment sought to be annulled, for against a void judgment, plaintiff-appellant's recourse would be proper.

There is no question as to the validity of the court's decision with respect to the issue of physical possession of property, the defendant-appellee's right to the same having been upheld. However, the plaintiff-appellant assails the money judgment handed down by the court which granted damages to the defendant-appellee. By reason thereof, he seeks the declaration of the nullity of the entire judgment.

It is the plaintiff-appellant's contention that moral damages may not properly be awarded in ejectment cases, the only recoverable damages therein being the reasonable compensation for use and occupancy of the premises and the legal measure of damages being the fair rental value of the property.

Plaintiff-appellant loses sight of the fact that the money judgment was awarded the defendant-appellee in the concept of a counterclaim. A defending party may set up a claim for money or any other relief which he may have against the opposing party in a counterclaim (Section 6, Rule 6, Revised Rules of Court). And the court may, if warranted, grant actual, moral, or exemplary damages as prayed for. The grant of moral damages, in the case at bar, as a counterclaim, and not as damages for the unlawful detention of property must be upheld. However, the amount thereof is another matter.

Plaintiff-appellant raises the issue of whether or not the Court of First Instance may, in an appeal, award the defendant-appellee's counterclaim in an amount exceeding or beyond the jurisdiction of the court of origin.

It is well-settled that a court has no jurisdiction to hear and determine a set-off or counterclaim in excess of its jurisdiction (Section 5, Rule 5, Revised Rules of Court; Ago v. Buslon, 10 SCRA 202). A counterclaim beyond the court's jurisdiction may only be pleaded by way of defense, the purpose of which, however, is only to defeat or weaken plaintiff's claim, but not to obtain affirmative relief (Section 5, Rule 5, Revised Rules of Court). Nevertheless, the defendant-appellee, in the case at bar, set up his claim in excess of the jurisdiction of the city court as a compulsory counterclaim. What is the legal effect of such a move?

Pertinent to our disposition of this question is our pronouncement in the case of Hyson Tan, et al. v. Filipinas Compania de Seguros, et al., (G.R. No. L-10096, March 23, 1956) later adopted in Pindangan Agricultural Co., Inc. v. Dans (6 SCRA 14) and the later case of One Heart Club, Inc. v. Court of Appeals (108 SCRA 416) to wit:

xxx xxx xxx

... An appellant who files his brief and submits his case to the Court of Appeals for decision, without questioning the latter's jurisdiction until decision is rendered therein, should be considered as having voluntarily waives so much of his claim as would exceed the jurisdiction of said Appellate Court; for the reason that a contrary rule would encourage the

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undesirable practice of appellants submitting their cases for decision to the Court of Appeals in expectation of favorable judgment, but with intent of attacking its jurisdiction should the decision be unfavorable. ...

Thus, by presenting his claim voluntarily before the City Court of Cebu, the defendant-appellee submitted the same to the jurisdiction of the court. He became bound thereby. The amount of P10,000.00 being the jurisdictional amount assigned the City Court of Cebu, whose jurisdiction the defendant-appellee has invoked, he is thereby deemed to have waived the excess of his claim beyond P10,000.00. It is as though the defendant-appellee had set up a counterclaim in the amount of P10,000.00 only. May the Court of First Instance then, on appeal, award defendant-appellee's counterclaim beyond that amount?

The rule is that a counterclaim not presented in the inferior court cannot be entertained in the Court of First Instance on appeal (Francisco, The Revised Rules of Court in the Philippines, Vol. III, p. 26, citing the cases of Bernardo v. Genato, 11 Phil. 603 and Yu Lay v. Galmes, 40 Phil. 651). As explained in Yu Lay v. Galmes— "Upon an appeal to a court of first instance from the judgment of a justice of the peace, it is not possible, without changing the purpose of the appeal, to alter the nature of the question raised by the complaint and the answer in the original action. There can be no doubt, therefore, of the scope of the doctrine laid down in the several decisions of the Court. Consequently, We hold that, upon an appeal to the Court of First Instance, the plaintiff as well as the defendant cannot file any pleading or allegation which raises a question essentially distinct from that raised and decided in the justice of the peace court. "This rule was reiterated in cases from Ng Cho Cio v. Ng Diong (1 SCRA 275) to Development Bank of the Philippines v. Court of Appeals (116 SCRA 636).

Thus, the defendant-appellee's counterclaim beyond P10,000.00, the jurisdictional amount of the city Court of Cebu, should be treated as having been deemed waived. It is as though it has never been brought before trial court. It may not be entertained on appeal.

The amount of judgment, therefore, obtained by the defendant-appellee on appeal, cannot exceed the jurisdiction of the court in which the action began. Since the trial court did not acquire jurisdiction over the defendant's counterclaim in excess of the jurisdictional amount, the appellate court, likewise, acquired no jurisdiction over the same by its decisions or otherwise. Appellate jurisdiction being not only a continuation of the exercise of the same judicial power which has been executed in the court of original jurisdiction, also presupposes that the original and appellate courts are capable of participating in the exercise of the same judicial power (See 2 Am. Jur. 850; Stacey Cheese Company v. R.E. Pipkin, Appt. 155 NC 394, 71 S.E. 442, 37 LRA 606) It is the essential criterion of appellate jurisdiction that it revises and corrects the proceedings in a cause already instituted, and does not create that cause (See 2 Am. Jur 850 citing Marbury v. Madison, 1 Cranch US, 137, 2 L. ed. 60).

It is, of course, a well-settled rule that when court transcends the limits prescribed for it by law and assumes to act where it has no jurisdiction, its adjudications will be utterly void and of no effect either as an estoppel or otherwise (Planas v. Collector of Internal Revenue, 3 SCRA 395; Parades v. Moya, 61 SCRA 526). The Court of First Instance, in the case at bar, having awarded judgment in favor of the defendant-appellee in excess of its appellate jurisdiction to the extent of P6,000.00 over the maximum allowable award of P10,000.00, the excess is null and void and of no effect. Such being the case, an action to declare the nullity of the award as brought by the plaintiff-appellant before the Court of First Instance of Cebu, Branch V is a proper remedy.

The nullity of such portion of the decision in question, however, is not such as to affect the conclusions reached by the court in the main case for ejectment. As held in Vda. de Pamintuan v. Tiglao (53 Phil. 1) where the amount set up by the defendant was not proper as a defense and it exceeded the inferior court's jurisdiction, it cannot be entertained therein, but the court's jurisdiction over the main action will remain unaffected. Consequently, the decision over the main action, in the case at bar, must stand, best remembering that a counter-claim, by its very nature, is a cause of action separate and independent from the plaintiff's claim against the defendant.

WHEREFORE, the decision of the Court of First Instance of Cebu, Branch III in Civil Case No. R-12430 for ejectment is hereby DECLARED NULL AND VOID insofar as it awards damages on the defendant-appellee's counterclaim in excess of P6,000.00 beyond its appellate jurisdiction. The decision in all other respects is AFFIRMED. The order of the Court of First Instance of Cebu, Branch V dismissing Civil Case No. R-13462 for declaration of nullity of judgment with preliminary injunction is hereby MODIFIED, Civil Case No. R-13462 is ordered DISMISSED insofar as the decision sought to be annulled upholds the defendant's right to possession of the disputed property. The defendant's counterclaim for damages is GRANTED to the extent of TEN THOUSAND (P10,000.00) PESOS. The grant of SIX THOUSAND (P6,000.00) PESOS in excess of such amount is hereby declared NULL and VOID, for having been awarded beyond the jurisdiction of the court.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Relova, De la Fuente and Alampay, JJ., concur.

11

SECOND DIVISION

[G.R. No. 131175. August 28, 2001]

SPOUSES JOVITO VALENZUELA and NORMA VALENZUELA, SPOUSES ALFREDO QUIAZON and BELLA GONZALES QUIAZON, SPOUSES EDUARDO DE GUZMAN and JULIETA DE GUZMAN, DE GUZMAN DEVELOPMENT CORPORATION, SKYFREIGHT BROKERAGE, INC., ATTY. ROMULO R. BOBADILA and WEB-HEGG CONSTRUCTION

RESOURCES, INCORPORATED, petitioners, vs. HONORABLE COURT OF APPEALS and SPOUSES MANUEL T. DE GUIA and LETICIA MARIANO DE GUIA and the REGISTER OF

DEEDS OF PARAAQUE CITY, METRO MANILA, Respondents.

D E C I S I O N

BUENA, J.:

In resolving the propriety of the amendment of the complaint in the present case, which motion to amend was filed after the lapse of fifteen years from the filing of the initiatory pleading sought to be amended, this Court painstakingly considered not only the peculiar circumstances obtaining, but also accorded premium to the legal truism that adjective law is not the counterfoil of substantive law and that the rules of procedure must not be perverted into engines of injustice. [1

Sought to be reversed in the instant petition for review on certiorari is the decision [2 of the Court of Appeals dated 15 August 1997 in C.A. G.R. SP. No. 44185, which nullified and set aside the orders dated 11 November 1996 [3 and 06 February 1997 of the Regional Trial Court (RTC) of Pasay City, Branch 231, in Civil Case No. PQ-9412-P. The subject orders of the RTC denied private respondents motion to admit amended complaint dated 18 March 1997.

Similarly impugned is the resolution [4 of the Court of Appeals dated 24 October 1997, denying private respondents motion for reconsideration.

The factual antecedents and proceedings unfold.

On 10 September 1981, herein private respondents spouses Manuel and Leticia De Guia filed a complaint for specific performance and damages docketed as Civil Case No. PQ-9412-P [5 against herein petitioners spouses Jovito and Norma Valenzuela before the then Court of First Instance of Rizal in Pasay City. The complaint prayed, among others, that the Spouses Valenzuela be ordered to execute in favor of private respondents the necessary deed of sale covering the two (2) parcels of land allegedly subject of a contract to sell between said parties.

On 16 September 1981, private respondents spouses De Guia, upon discovering that the subject real properties were sold and transferred by the spouses Valenzuela to herein co-petitioners spouses Alfredo and Bella Gonzales Quiazon, filed Civil Case No. PQ- 9432-P [6 for annulment of sale, cancellation of title and damages, against spouses Valenzuela, spouses Quiazon, and the Register of Deeds of Pasay City. In the complaint, private respondents spouses De Guia prayed specifically for the annulment of the deed of sale executed by the

spouses Valenzuela in favor of the spouses Quiazon, cancellation of TCT Nos. 39396 and 39397 in the name of spouses Quiazon, and the reinstatement of TCT No. 39142 in the name of the spouses Valenzuela, or in the alternative, the reconveyance of the subject properties by the spouses Quiazon to spouses Valenzuela.

On 13 October 1981, private respondents spouses De Guia amended their complaint in Civil Case No. PQ-9432-P impleading Webb-Hegg Construction Resources, Inc. as additional defendant.

On 19 January 1983, spouses De Guia filed in Civil Case No. PQ-9432-P a Motion to Admit Second Amended Complaint impleading as additional defendant Gerardo Villacorta. Prior to the resolution of such pending motion, Civil Case No. PQ-9432-P was transferred to the Regional Trial Court of Makati, Branch 133 pursuant to the Judiciary Reorganization Law (B.P. Blg. 129). As a result of the transfer of the case, Civil Case No. PQ-9432-P was redocketed as Civil Case No. 2723.

On 20 May 1983, the RTC of Makati, Branch 133 issued an order admitting the second amended complaint. Upon motion of the defendants therein, however, Civil Case No. 2723 was returned to RTC-Pasay, where herein private respondents spouses De Guia filed a motion to admit third amended complaint seeking to implead spouses De Guzman, De Guzman Development Corporation, Skyfreight Brokerage, Inc. and Lawyer Romeo Bobadilla, as additional defendants.

On 30 May 1984, the RTC-Pasay issued an omnibus order [7 denying the motion to admit the third amended complaint and declaring as automatically vacated the order of RTC-Makati, Branch 133, which admitted the second amended complaint. Upon denial of their motion for reconsideration, private respondents spouses De Guia then filed a petition for certiorari and prohibition before the appellate court, docketed as CA G.R. SP. No. 04518.

On 27 March 1990, after a preliminary hearing on the affirmative defenses of pendency of another action and splitting a cause of action, the lower court issued an order dismissing the complaint in Civil Case No. PQ-9432-P. Private respondents spouses De Guia appealed the dismissal of said case before the Court of Appeals which on 30 March 1994, affirmed the dismissal order of the lower court. Aggrieved, private respondents spouses De Guia filed a petition before the Supreme Court assailing the decision of the Court of Appeals.

In a Resolution dated 24 July 1995, the High Court dismissed the petition for having been filed beyond the reglementary period. Private respondents moved to reconsider, which motion the Supreme Court denied via a resolution dated 30 September 1995.

Upon motion of spouses Quiazon in Civil Case Nos. PQ-9412-P and PQ-9432-P, the lower court issued an order dated 17 January 1996 directing the cancellation of the Notice of Lis Pendens under Entry No. 81-11596 and Entry No. 81-12186 and the Adverse Claim under Entry No. 81-11601 on TCT Nos. 39386 and 39397 in the name of spouses Quiazon. On 02 February 1996, private respondents sought to reconsider the trial courts order.

On 18 March 1996, private respondents filed a motion to admit amended complaint in Civil Case No. PQ-9412-P. Prior to the resolution of the two pending motions, private respondents filed a motion for the inhibition of the presiding judge of Branch 117, RTC-Pasay. In an order dated 17

12

April 1996, the court granted the motion for inhibition resulting in the re-raffle of Civil Case No. PQ-9412-P to Branch 231, presided by Judge Cesar Z. Ylagan.

In an order dated 11 November 1996, Judge Ylagan denied the motion to admit amended complaint prompting herein private respondents spouses De Guia to file a motion for reconsideration which the lower court denied.

Private respondents elevated the lower courts order denying the motion to admit amended complaint to the Court of Appeals.

On 15 August 1997, the Court of Appeals rendered the assailed decision the decretal portion of which declares:

WHEREFORE, the instant petition for certiorari and mandamus is hereby GRANTED. Consequently, the orders dated November 11, 1996 and February 6, 1997 are SET ASIDE and respondent is ordered to admit petitioners amended complaint dated March 18, 1997.

On 05 November 1997, the RTC-Pasay, Branch 231 issued an order [8 admitting the amended complaint, pursuant to the decision of the Court of Appeals dated 15 August 1997. Herein petitioners filed with the lower court a manifestation with motion to reconsider [9 to the effect that they would file a petition for review on certiorari before the Supreme Court, to which manifestation private respondents filed an opposition. Petitioners then filed a reply to the opposition after which the lower court, in an order dated 23 January, decreed that the admission of the amended complaint and service of summons are hereby held in abeyance until after the Supreme Court has resolved the case before it which has effectively placed this court on notice.

On 17 December 1997, herein petitioners filed the instant petition where this Court is tasked in the main to resolve the propriety of the amendment of the complaint in Civil Case No. PQ-9412-P. Petitioners argue, among others, that the amendment should not be allowed inasmuch as the introduction of amendments to the complaint in Civil Case No. PQ-9412-P would, in effect, radically and substantially change the cause of action and theory of the case.

The Court sanctions the amendment of the complaint and resolves to strike down the petition. At this point, a review of the pertinent provisions regarding amendments is in order. Section 1, Rule 10 of the 1997 Rules of Civil Procedure explicitly provides:

Section 1. Amendment in general. Pleadings may be amended by adding or striking out an allegation or the name of any party, or by correcting a mistake in the name of a party or a mistaken or inadequate allegation or description in any other respect, so that the actual merits of the controversy may speedily be determined, without regard to technicalities, and in the most expeditious and inexpensive manner. (emphasis ours)

Equally important is Section 3, Rule 10 of the Rules:

Section 3. Amendments by leave of court. Except as provided in the next preceding section, substantial amendments may be made only upon leave of court. But such leave may be refused if it appears to the court that the motion was made with intent to delay. Orders of the court upon the matters provided in this section shall be made upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard.

Petitioners contend that the foregoing provisions of the 1997 Rules of Civil Procedure cannot be applied in the case at bar. We do not agree. Elementary is the rule in this jurisdiction that one does not have a vested right in procedural rules, thus:

Statutes regulating the procedure of courts will be considered as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retroactive in that sense and to that extent. The fact that procedural statutes may somehow affect the litigants rights may not preclude their retroactive application to pending actions. The retroactive application of procedural laws is not violative of any right of a person who may feel that he is adversely affected. Nor is the retroactive application of procedural statutes constitutionally objectionable. The reason is that as a general rule, no vested right may attach to, nor arise from procedural laws. It has been held that a person has no vested right in any particular remedy, and a litigant cannot insist on the application to the trial of his case, whether civil or criminal, of any other than the existing rules of procedure.[10 (emphasis ours)

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure [11 amended the former rule [12 in such manner that the phrase or that the cause of action or defense is substantially altered was stricken-off and not retained in the new rules. The clear import of such amendment in Section 3, Rule 10 is that under the new rules, the amendment may (now) substantially alter the cause of action or defense. [13 This should only be true, however, when despite a substantial change or alteration in the cause of action or defense, the amendments sought to be made shall serve the higher interests of substantial justice, and prevent delay and equally promote the laudable objective of the rules which is to secure a just, speedy and inexpensive disposition of every action and proceeding.

Thus, granting arguendo that the amendment of the complaint in Civil Case No. PQ-9432-P would substantially alter or change the cause of action or defense in said controversy, this Court nonetheless holds that in the higher interest of substantial justice, the introduction of amendments to the complaint is apropos at this particular instance to forestall further delay in the resolution of the actual merits of the parties respective claims and defenses. To reiterate, the Rules of Court seek to eliminate undue reliance on technical rules and to make litigation as inexpensive, as practicable and as convenient as can be done. [14 Rules of procedure, after all, are but tools designed to facilitate the attainment of justice, such that when rigid application of the rules tends to frustrate rather than promote substantial justice, the Supreme Court is empowered to suspend their operation. [15 This Court will not hesitate to set aside technicalities in favor of what is fair and just. [16

As the records would readily reveal, the instant case Civil Case No. PQ-9412-P has already dragged and suffered protracted delay for a span of twenty years, borne by countless legal skirmishes between the party litigants involving principally entanglement on technical niceties and procedural rules. In fact, the procedural incidents and interlocutory matters relating to this controversy, to wit, Civil Case No. PQ-9412-P and its related case Civil Case No. PQ-9432-P, have reached no less than the portals of this Court at least twice first, as to the specific issue of the propriety of admission of a third amended complaint in Civil Case No. PQ-9432 and second, as to the particular query on the validity of the dismissal of Civil Case No. PQ-9432-P, on the ground of litis pendentia.

By and large, due to the multifarious procedural incidents involving these two suits, albeit issues concededly not to be outrightly dismissed as less important, the actual merits of the controversy have yet to reach their full adjudication, resolution and determination. Under these circumstances, particularly considering the dismissal of Civil Case No. PQ-9432-P on ground of litis pendentia, the disallowance of the amendment of the complaint in Civil Case No. PQ-9412-P

13

would, to our mind, necessarily result in an even greater delay in the disposition and adjudication of the actual merits of the case, which run counter to the hallowed office and cardinal objective of the Rules to provide, at each possible instance, an expeditious and full resolution of issues involving the respective rights and liabilities of the parties under substantive law.

True enough, the delay that has so characterized the adjudication of the merits of this case-- which original complaint was filed practically two decades ago-- has not escaped the attention of this Court. Thus, in the interest of substantial justice, this Court allows the introduction of amendments to the complaint in Civil Case No. PQ-9412-P so as to afford the party-litigants the full and genuine opportunity to substantiate their respective claims and defenses and for the trial court to finally resolve the matters relating to the merits of the case.

Besides, the defendants sought to be impleaded in Civil Case No. PQ-9412-P are not left without justifiable recourse. To this end, the law in no uncertain terms provide for the necessary legal implements and the adoption of effective means and defenses sanctioned by the Rules, wherein both parties in the controversy may very well advance and protect their respective legal interests. By sanctioning the introduction of amendments to the complaint, the issues shall at last be viewed, so to speak, in the clear light of day and substantial matters therein shall not anymore be lost in the abyss of technicalities and procedural jargon.

On this matter, the discourse of the Court of Appeals is elucidating:

With the dismissal of Civil Case No. PQ-9432-P in which petitioners (herein private respondents spouses De Guia) seek the annulment of the sale made by spouses Valenzuela in favor of spouses Quiazon, complete relief could be obtained by petitioners only by the admission of the amended complaint. Without the amendment, a favorable judgment for petitioners would be meaningless, if not futile, as the properties covered by the contract to sell which they seek to enforce had already been sold to spouses Quiazon, who are among those sought to be impleaded as additional defendants in the amended complaint.

X X X The inquiry should be as to whether or not the amendment is necessary to enable the parties, particularly petitioners, to obtain complete relief in just one proceeding. As above stated, the non-inclusion of spouses Quiazon and others who may have acquired rights or interest in the properties in question will render the relief originally sought in Civil Case No. PQ-9412-P incomplete without the sale or transfer to spouses Quiazon being nullified; hence, the need for the amendment. X X X

X X X Needless to state, the court is of the considered opinion that admission of the amended complaint is not only necessary to afford complete relief to the parties; it will also forestall any further need to institute other actions or proceedings arising from the transaction subject matter of Civil Case No. PQ-9412-P. X X X

Inasmuch as herein private respondents, in its amended complaint, likewise pray for reconveyance of the real property, considering that the subject parcels of land were transferred in the name of spouses Quiazon who notably were not impleaded in the original complaint in Civil Case No. PQ-9412-P, it bears to stress that owners of property over which reconveyance is asserted are indispensable parties without whom no relief is available and without whom the court can render no valid judgment. [17

Additionally, petitioners stubbornly maintain that the principle of res judicata, specifically the doctrine of conclusiveness of judgment, should find application in the instant case so as to preclude the court from resolving anew the propriety of the amendment in Civil Case No. PQ-9412-P, which issue, according to petitioner, was previously passed upon and determined in Civil Case No. PQ-9432-P.

The contention is without basis. Res judicata, either in the concept of bar by former judgment or conclusiveness of judgment, cannot be applied to the present case.

In Vda. De Cruzo vs. Carriaga, Jr., [18 this Court speaking through Mr. Justice Florenz Regalado, inked an enlightening discourse on the subject:

The doctrine of res judicata thus lays down two main rules which may be stated as follows: 1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either before the same or any other tribunal; and 2) Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether or not the claim or demand, purpose or subject matter of the two suits is the same. These two main rules mark the distinction between the principles governing the two typical cases in which a judgment may operate as evidence. In speaking of these cases, the first general rule above stated, and which corresponds to the aforequoted paragraph (b) of Section 49, is referred to as bar by former judgment while the second general rule, which is embodied in paragraph (c) of the same section, is known as conclusiveness of judgment.

Stated otherwise, when we speak of res judicata in its concept as a bar by former judgment. the judgment rendered in the first case is an absolute bar to the subsequent action since said judgment is conclusive not only as to the matters offered and received to sustain that judgment but also as to any other matter which might have been offered for that purpose and which could have been adjudged therein. This is the concept in which the term res judicata is more commonly and generally used and in which it is understood as the bar by prior judgment constituting a ground for a motion to dismiss in civil cases.

On the other hand, the less familiar concept or less terminological usage of res judicata as a rule on conclusiveness of judgment refers to the situation where the judgment in the prior action operates as an estoppel only as to the matters actually determined therein or which were necessarily included therein. Consequently, since other admissible and relevant matters which the parties in the second action could properly offer are not concluded by the said judgment, the same is not a bar to or a ground for dismissal of the second action.

At bottom, the other elements being virtually the same, the fundamental difference between the rule of res judicata as a bar by former judgment and as merely a rule on the conclusiveness of judgment is that, in the first, there is an identity in the cause of action in both cases involved whereas, in the second, the cause of action in the first case is different from that in the second case. (emphasis ours)

Proceeding from the foregoing disquisition, the principle of res judicata, requires the concurrence of the following requisites: [19

14

a) The former judgment or order must be final;

b) It must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case;

c) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and

d) There must be, between the first and second actions, identity of parties, of subject matter and of cause of action. This requisite is satisfied if the two actions are substantially between the same parties. (emphasis ours)

For want of the second requisite, to wit, that the judgment must be rendered on the merits, the instant case is thus removed from the operation of the principle of res judicata. Stated differently, if the judgment is not on the merits, it cannot be considered as a conclusive adjudication of the controversy. Consequently, a judgment dismissing an action for want of jurisdiction, or because of the pendency of another action between the same parties and for the same cause, or a judgment absolving a defendant because he was not served with summons, or a dismissal on the ground of misjoinder cannot operate as res adjudicata on the merits. [20

To this end, it must be noted that the dismissal of Civil Case No. PQ-9432-P was due to litis pendentia or the pendency of another action, obviously referring to Civil Case No. PQ-9412-P. Applying the foregoing doctrines, the judgment dismissing Civil Case No. PQ-9432-P, on the ground of litis pendentia, cannot be considered an adjudication on the merits. [21 Clearly then, res judicata cannot apply.

WHEREFORE, premises considered, the assailed decision of the Court of Appeals in C.A. G.R. SP. No. 44185 is AFFIRMED and the instant petition is DENIED for lack of merit. Accordingly, the Regional Trial Court of Pasay City-Branch 231, is hereby ordered to admit herein private respondents amended complaint in Civil Case No. PQ-9412-P, to issue the necessary summons to all impleaded defendants therein and to resolve the case with dispatch.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.

15

G.R. No. 87617 April 6, 1990

JOE HODGES, petitioner, vs.COURT OF APPEALS, HEIRS OF LEON P. GELLADA, plaintiff-appellee in Civil Case No. 6512, ROMEO MEDIODIA, plaintiff-appellant in Civil Case No. 6513, and HEIRS OF FERNANDO MIRASOL, plaintiff-appellee in Civil Case No. 6516, respondents.

Tivol & Tivol Law Office for petitioner.

Efrain Trenas for Romeo Mediodia.

Villa and Partners for private respondents.

Norberto Posecion for Heirs of Gellada.

 

GANCAYCO, J.:

What is the legal effect of the non-payment of the docket fees even before the promulgation of Manchester Development Corporation vs. Court of appeals? 1 This is the decisive issue in this petition.

On April 7, 1964 Leon P. Gellada, a practicing lawyer, filed an action for damages against Joe Hodges in the Court of First Instance of Iloilo City, wherein plaintiff claimed damages against defendant for some alleged defamatory statements of defendant against plaintiff and his associates thus entitling him to moral damages of P400,000.00, damage to his law practice of P30,000.00, attorney's fees of P30,000.00, and exemplary damages as well as temperate damages. A special appearance questioning the jurisdiction of the court on the subject matter and the mode of extrajudicial service of summons dated June 24, 1964 was filed by defendant. The defendant pointed out that the court cannot acquire jurisdiction over the case unless the corresponding docket fee is paid. The defendant maintained that considering the amount of damages claimed by the plaintiff, the docket fee to be paid should be no less than P770.00 which is way beyond the P32.00 docket fee paid by plaintiff.

An answer, amended answer and a reply thereto were filed. The amended answer was admitted.

On March 31, 1964, Romeo H. Mediodia, also a practicing lawyer, filed in the same court a similar action for damages against Joe Hodges for alleged defamatory statements of defendant against plaintiff, wherein plaintiff claimed for moral damages of not less than P300,000.00, damage to his law practice of not less than P20,000.00, attorney's fee of P40,000.00 and exemplary damages as well as temperate damages. A special appearance questioning the jurisdiction over the subject matter and the mode of extrajudicial service of summons dated June 25, 1964 was also filed by defendant pointing that the court cannot acquire jurisdiction over the

case when plaintiff claimed damages of P360,000.00 and he paid a docket fee of only P32.00 when it should not be less than P570.00. After an answer, amended answer, and a reply thereto were filed, the amended answer was admitted by the trial court.

On April 8, 1964, another complaint for damages was filed by Fernando P. Mirasol, another practicing lawyer, against Joe Hodges, for alleged defamatory statements of defendant against plaintiff, wherein plaintiff claimed moral damages of not less than P350,000.00, damage to his law practice of not less than P25,000.00, attorney's fees of P35,000.00, and exemplary damages as well as temperate damages. A similar special appearance for the defendant questioning the jurisdiction on the subject matter of the court and the mode of extrajudicial service of summons dated June 25, 1964 and pointing out that the court cannot acquire jurisdiction over the case as the plaintiff claimed damages of P410,000.00 but he paid a docket fee of only P32.00 when it should not be less than P670.00. After an answer, an amended answer and a reply thereto was filed, the amended answer were admitted by the trial court.

On August 31, 1972, these three cases were ordered consolidated by the trial court. On the same date another order was issued directing the plaintiffs to pay the docket fee commensurate to their respective demands. This was reiterated in another order dated March 11, 1982.

On March 16, 1982 plaintiff Gellada paid the amount of P168.00 bringing his total payment of docket fees to P200.00. On September 5, 1972 plaintiff Mediodia paid P168.00 so he had paid a total of P200.00 for docket fees. Plaintiff Mirasol failed to comply with the said orders.

Plaintiff Gellada died on February 4, 1974 so an order was issued for the substitution of his heirs. Plaintiff Mirasol also died on March 29, 1979, so another order was issued by the trial court for the substitution of his heirs.

After trial on the merits, a judgment was rendered by the trial court on February 18, 1988, the dispositive part of which reads as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant Joe Hodges —

In Civil Case No. 6512, to pay the heirs of plaintiff Leon Gellada, the sums of P50,000.00 and P10,000.00 as moral and exemplary damages, respectively; P20,000.00 for and as attorney's fees and P10,000.00 as expenses of litigation, plus costs;

In Civil Case No. 6513, to pay the plaintiff Romeo Mediodia the sums of P50,000.00 and P10,000.00 as moral and exemplary damages, respectively; P20,000.00 for and as attorney's fees and P10,000.00 as expenses of litigation, plus costs; and

In Civil Case No. 6516, to pay the heirs of plaintiff Fernando Mirasol, with the exception of Ferdinand Mirasol, the sums of P50,000.00 and P10,000.00 as moral and exemplary damages, respectively; P20,000.00 for and as attorney's fees and P10,000.00 as expenses of litigation, plus costs. 2

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Not satisfied therewith, petitioner appealed to the Court of Appeals, wherein in due course a decision was rendered on October 28, 1988 affirming the decision appealed from, with costs against petitioner. 3

A motion for reconsideration of the said decision having been denied in a resolution of March 8, 1989, the instant petition was then filed in this Court, wherein nine (9) errors are alleged to have been committed by the appellate court. The Court finds it necessary to dispose of the first assigned error on the question of non-payment of docket fees.

As early as Lazaro vs. Endencia, 4 this Court held that an appeal is not deemed perfected if the appellate court docket fee is not fully paid. In Lee vs. Republic, 5 this Court ruled that a declaration of intention to be a Filipino citizen produced no legal effect until the required filing fee is paid. In Malimit vs. Degamo, 6 We held that the date of payment of the docket fee must be considered the real date of filing of a petition for quo warranto and not the date it was mailed. In Magaspi vs. Ramolete, 7 the well-settled rule was reiterated that a case is deemed filed only upon payment of the docket fee regardless of the actual date of its filing in court. 8

At the time, therefore, that the three (3) cases subject of the herein petition were filed, the rule was already clear that the court does not acquire jurisdiction over a case until after the prescribed docket is paid.

In Manchester, this rule was emphasized when this Court stated "The court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the court, much less the payment of the docket fee based on the amount sought in the amended pleading. 9

The rule in Manchester was relaxed in Sun Insurance vs. Hon. Maximiano Asuncion, 10 whereby this Court declared that the trial court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. Nevertheless, in Sun Insurance, this Court reiterated the rule that it is the payment of the prescribed docket fee that vests the court with Jurisdiction over the subject matter of nature of the case. 11

In the present petition, it appellants that in the case of Gellada vs. Hodges the total amount of the claim for damages is about P460,000.00, the estimated docket fee due is P770.00 but what was paid only was P32.00. Despite the order of the trial court on August 31, 1972 and another order ten years later, that is on March 11, 1982, requiring plaintiff to pay the correct docket fee, Gellada paid the amount of P168.00 Thus his total payment amounts to just P200.00, which is still much less than the amount of P770.00 due.

Similarly in Mediodia vs. Hodges where the claim is approximately P360,000.00 and the appropriate filing fee would be about P570.00, the plaintiff paid only P32.00 upon filing the complaint. After the two aforesaid order of the trial court were issued, Mediodia paid on September 5, 1982 the amount of P168.00 bringing his payment to a total of P200.00 which is also much less than the amount of P570.00 due for docket fee.

In the case of Mirasol vs. Hodges, the total claim is for P410,000.00 and the amount of filing fee due is P670.00. Mirasol paid only P32.00 upon filing the complaint. He did not pay any additional sum even after the two orders of the court had been issued.

No doubt, the trial court did not acquire jurisdiction over the subject matter in said three (3) cases due to the failure to pay in full the prescribed docket fee. Thus, the entire proceedings undertaken in said cases are null and void. The plaintiffs in said cases are practicing lawyers who are expected to know this mandatory requirement in the filing of any complaint or similar pleading. Their non-payment of the prescribed docket fee was deliberate and inexcusable.

WHEREFORE, the petition is GRANTED. The appealed decision of the Court of Appeals dated October 28, 1988 and its resolution dated February 8, 1989 are hereby reversed and set aside and another judgment is hereby rendered dismissing the complaints in said three (3) cases. No pronouncement as to costs.

SO ORDERED.

Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

17

G.R. No. 75919 May 7, 1987

MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners, vs.COURT OF APPEALS, CITY LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS, ANDREW LUISON, GRACE LUISON and JOSE DE MAISIP, respondents.

Tanjuatco, Oreta and Tanjuatco for petitioners.

Pecabar Law Offices for private respondents.

R E S O L U T I O N

 

GANCAYCO, J.:

Acting on the motion for reconsideration of the resolution of the Second Division of January 28,1987 and another motion to refer the case to and to be heard in oral argument by the Court En Banc filed by petitioners, the motion to refer the case to the Court en banc is granted but the motion to set the case for oral argument is denied.

Petitioners in support of their contention that the filing fee must be assessed on the basis of the amended complaint cite the case of Magaspi vs. Ramolete. 1 They contend that the Court of Appeals erred in that the filing fee should be levied by considering the amount of damages sought in the original complaint.

The environmental facts of said case differ from the present in that —

1. The Magaspi case was an action for recovery of ownership and possession of a parcel of land with damages. 2 While the present case is an action for torts and damages and specific performance with prayer for temporary restraining order, etc. 3

2. In the Magaspi case, the prayer in the complaint seeks not only the annulment of title of the defendant to the property, the declaration of ownership and delivery of possession thereof to plaintiffs but also asks for the payment of actual moral, exemplary damages and attorney's fees arising therefrom in the amounts specified therein. 4 However, in the present case, the prayer is for the issuance of a writ of preliminary prohibitory injunction during the pendency of the action against the defendants' announced forfeiture of the sum of P3 Million paid by the plaintiffs for the property in question, to attach such property of defendants that maybe sufficient to satisfy any judgment that maybe rendered, and after hearing, to order defendants to execute a contract of purchase and sale of the subject property and annul defendants' illegal forfeiture of the money of plaintiff, ordering defendants jointly and severally to pay plaintiff actual, compensatory and exemplary damages as well as 25% of said amounts as maybe proved during the trial as attorney's fees and declaring the tender of payment of the purchase price of plaintiff valid and producing the effect of payment and to make the injunction permanent. The amount of damages

sought is not specified in the prayer although the body of the complaint alleges the total amount of over P78 Million as damages suffered by plaintiff. 5

3. Upon the filing of the complaint there was an honest difference of opinion as to the nature of the action in the Magaspi case. The complaint was considered as primarily an action for recovery of ownership and possession of a parcel of land. The damages stated were treated as merely to the main cause of action. Thus, the docket fee of only P60.00 and P10.00 for the sheriff's fee were paid. 6

In the present case there can be no such honest difference of opinion. As maybe gleaned from the allegations of the complaint as well as the designation thereof, it is both an action for damages and specific performance. The docket fee paid upon filing of complaint in the amount only of P410.00 by considering the action to be merely one for specific performance where the amount involved is not capable of pecuniary estimation is obviously erroneous. Although the total amount of damages sought is not stated in the prayer of the complaint yet it is spelled out in the body of the complaint totalling in the amount of P78,750,000.00 which should be the basis of assessment of the filing fee.

4. When this under-re assessment of the filing fee in this case was brought to the attention of this Court together with similar other cases an investigation was immediately ordered by the Court. Meanwhile plaintiff through another counsel with leave of court filed an amended complaint on September 12, 1985 for the inclusion of Philips Wire and Cable Corporation as co-plaintiff and by emanating any mention of the amount of damages in the body of the complaint. The prayer in the original complaint was maintained. After this Court issued an order on October 15, 1985 ordering the re- assessment of the docket fee in the present case and other cases that were investigated, on November 12, 1985 the trial court directed plaintiffs to rectify the amended complaint by stating the amounts which they are asking for. It was only then that plaintiffs specified the amount of damages in the body of the complaint in the reduced amount of P10,000,000.00. 7 Still no amount of damages were specified in the prayer. Said amended complaint was admitted.

On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to pay the amount of P3,104.00 as filing fee covering the damages alleged in the original complaint as it did not consider the damages to be merely an or incidental to the action for recovery of ownership and possession of real property. 8 An amended complaint was filed by plaintiff with leave of court to include the government of the Republic as defendant and reducing the amount of damages, and attorney's fees prayed for to P100,000.00. Said amended complaint was also admitted. 9

In the Magaspi case, the action was considered not only one for recovery of ownership but also for damages, so that the filing fee for the damages should be the basis of assessment. Although the payment of the docketing fee of P60.00 was found to be insufficient, nevertheless, it was held that since the payment was the result of an "honest difference of opinion as to the correct amount to be paid as docket fee" the court "had acquired jurisdiction over the case and the proceedings thereafter had were proper and regular." 10 Hence, as the amended complaint superseded the original complaint, the allegations of damages in the amended complaint should be the basis of the computation of the filing fee. 11

In the present case no such honest difference of opinion was possible as the allegations of the complaint, the designation and the prayer show clearly that it is an action for damages and specific performance. The docketing fee should be assessed by considering the amount of damages as alleged in the original complaint.

18

As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed only upon payment of the docket fee regardless of the actual date of filing in court . 12 Thus, in the present case the trial court did not acquire jurisdiction over the case by the payment of only P410.00 as docket fee. Neither can the amendment of the complaint thereby vest jurisdiction upon the Court. 13 For an legal purposes there is no such original complaint that was duly filed which could be amended. Consequently, the order admitting the amended complaint and all subsequent proceedings and actions taken by the trial court are null and void.

The Court of Appeals therefore, aptly ruled in the present case that the basis of assessment of the docket fee should be the amount of damages sought in the original complaint and not in the amended complaint.

The Court cannot close this case without making the observation that it frowns at the practice of counsel who filed the original complaint in this case of omitting any specification of the amount of damages in the prayer although the amount of over P78 million is alleged in the body of the complaint. This is clearly intended for no other purpose than to evade the payment of the correct filing fees if not to mislead the docket clerk in the assessment of the filing fee. This fraudulent practice was compounded when, even as this Court had taken cognizance of the anomaly and ordered an investigation, petitioner through another counsel filed an amended complaint, deleting all mention of the amount of damages being asked for in the body of the complaint. It was only when in obedience to the order of this Court of October 18, 1985, the trial court directed that the amount of damages be specified in the amended complaint, that petitioners' counsel wrote the damages sought in the much reduced amount of P10,000,000.00 in the body of the complaint but not in the prayer thereof. The design to avoid payment of the required docket fee is obvious.

The Court serves warning that it will take drastic action upon a repetition of this unethical practice.

To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assessment of the filing fees in any case. Any pleading that fails to comply with this requirement shall not bib accepted nor admitted, or shall otherwise be expunged from the record.

The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the Court, much less the payment of the docket fee based on the amounts sought in the amended pleading. The ruling in the Magaspi case 14 in so far as it is inconsistent with this pronouncement is overturned and reversed.

WHEREFORE, the motion for reconsideration is denied for lack of merit.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Sarmiento and Cortes, JJ., concur.

Paras, J., took no part.

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EN BANC

G.R. Nos. 79937-38 February 13, 1989

SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, petitioners, vs.HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial Court, Quezon City and MANUEL CHUA UY PO TIONG, respondents.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles Law Offices for petitioners. Tanjuatco, Oreta, Tanjuatco, Berenguer & Sanvicente Law Offices for private respondent. 

GANCAYCO, J.:

Again the Court is asked to resolve the issue of whether or not a court acquires jurisdiction over a case when the correct and proper docket fee has not been paid.

On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a complaint with the Regional Trial Court of Makati, Metro Manila for the consignation of a premium refund on a fire insurance policy with a prayer for the judicial declaration of its nullity against private respondent Manuel Uy Po Tiong. Private respondent as declared in default for failure to file the required answer within the reglementary period.

On the other hand, on March 28, 1984, private respondent filed a complaint in the Regional Trial Court of Quezon City for the refund of premiums and the issuance of a writ of preliminary attachment which was docketed as Civil Case No. Q-41177, initially against petitioner SIOL, and thereafter including E.B. Philipps and D.J. Warby as additional defendants. The complaint sought, among others, the payment of actual, compensatory, moral, exemplary and liquidated damages, attorney's fees, expenses of litigation and costs of the suit. Although the prayer in the complaint did not quantify the amount of damages sought said amount may be inferred from the body of the complaint to be about Fifty Million Pesos (P50,000,000.00).

Only the amount of P210.00 was paid by private respondent as docket fee which prompted petitioners' counsel to raise his objection. Said objection was disregarded by respondent Judge Jose P. Castro who was then presiding over said case. Upon the order of this Court, the records of said case together with twenty-two other cases assigned to different branches of the Regional Trial Court of Quezon City which were under investigation for under-assessment of docket fees were transmitted to this Court. The Court thereafter returned the said records to the trial court with the directive that they be re-raffled to the other judges in Quezon City, to the exclusion of Judge Castro. Civil Case No. Q-41177 was re-raffled to Branch 104, a sala which was then vacant.

On October 15, 1985, the Court en banc issued a Resolution in Administrative Case No. 85-10-8752-RTC directing the judges in said cases to reassess the docket fees and that in case of deficiency, to order its payment. The Resolution also requires all clerks of court to issue certificates of re-assessment of docket fees. All litigants were likewise required to specify in their pleadings the amount sought to be recovered in their complaints.

On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-41177 was temporarily assigned, issuedan order to the Clerk of Court instructing him to issue a certificate of assessment of the docket fee paid by private respondent and, in case of deficiency, to include the same in said certificate.

On January 7, 1984, to forestall a default, a cautionary answer was filed by petitioners. On August 30,1984, an amended complaint was filed by private respondent including the two additional defendants aforestated.

Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter assigned, after his assumption into office on January 16, 1986, issued a Supplemental Order requiring the parties in the case to comment on the Clerk of Court's letter-report signifying her difficulty in complying with the Resolution of this Court of October 15, 1985 since the pleadings filed by private respondent did not indicate the exact amount sought to be recovered. On January 23, 1986, private respondent filed a "Compliance" and a "Re-Amended Complaint" stating therein a claim of "not less than Pl0,000,000. 00 as actual compensatory damages" in the prayer. In the body of the said second amended complaint however, private respondent alleges actual and compensatory damages and attorney's fees in the total amount of about P44,601,623.70.

On January 24, 1986, Judge Asuncion issued another Order admitting the second amended complaint and stating therein that the same constituted proper compliance with the Resolution of this Court and that a copy thereof should be furnished the Clerk of Court for the reassessment of the docket fees. The reassessment by the Clerk of Court based on private respondent's claim of "not less than P10,000,000.00 as actual and compensatory damages" amounted to P39,786.00 as docket fee. This was subsequently paid by private respondent.

Petitioners then filed a petition for certiorari with the Court of Appeals questioning the said order of Judie Asuncion dated January 24, 1986.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of P20,000,000.00 as d.qmages so the total claim amounts to about P64,601,623.70. On October 16, 1986, or some seven months after filing the supplemental complaint, the private respondent paid the additional docket fee of P80,396.00. 1

On August 13, 1987, the Court of Appeals rendered a decision ruling, among others, as follows:

WHEREFORE, judgment is hereby rendered:

1. Denying due course to the petition in CA-G.R. SP No. 1, 09715 insofar as it seeks annulment of the order

(a) denying petitioners' motion to dismiss the complaint, as amended, and

(b) granting the writ of preliminary attachment, but giving due course to the portion thereof questioning the reassessment of the docketing fee, and requiring the Honorable respondent Court to reassess the docketing fee to be paid by private respondent on the basis of the amount of P25,401,707.00. 2

20

Hence, the instant petition.

During the pendency of this petition and in conformity with the said judgment of respondent court, private respondent paid the additional docket fee of P62,432.90 on April 28, 1988. 3

The main thrust of the petition is that the Court of Appeals erred in not finding that the lower court did not acquire jurisdiction over Civil Case No. Q-41177 on the ground of nonpayment of the correct and proper docket fee. Petitioners allege that while it may be true that private respondent had paid the amount of P182,824.90 as docket fee as herein-above related, and considering that the total amount sought to be recovered in the amended and supplemental complaint is P64,601,623.70 the docket fee that should be paid by private respondent is P257,810.49, more or less. Not having paid the same, petitioners contend that the complaint should be dismissed and all incidents arising therefrom should be annulled. In support of their theory, petitioners cite the latest ruling of the Court in Manchester Development Corporation vs. CA, 4 as follows:

The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the Court, much less the payment of the docket fee based on the amounts sought in the amended pleading. The ruling in the Magaspi Case in so far as it is inconsistent with this pronouncement is overturned and reversed.

On the other hand, private respondent claims that the ruling in Manchester cannot apply retroactively to Civil Case No. Q41177 for at the time said civil case was filed in court there was no such Manchester ruling as yet. Further, private respondent avers that what is applicable is the ruling of this Court in Magaspi v. Ramolete, 5 wherein this Court held that the trial court acquired jurisdiction over the case even if the docket fee paid was insufficient.

The contention that Manchester cannot apply retroactively to this case is untenable. Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retrospective in that sense and to that extent. 6

In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full amount of the docket fee is an indispensable step for the perfection of an appeal. In a forcible entry and detainer case before the justice of the peace court of Manaoag, Pangasinan, after notice of a judgment dismissing the case, the plaintiff filed a notice of appeal with said court but he deposited only P8.00 for the docket fee, instead of P16.00 as required, within the reglementary period of appeal of five (5) days after receiving notice of judgment. Plaintiff deposited the additional P8.00 to complete the amount of the docket fee only fourteen (14) days later. On the basis of these facts, this court held that the Court of First Instance did notacquire jurisdiction to hear and determine the appeal as the appeal was not thereby perfected.

In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become a Filipino citizen by sending it through registered mail to the Office of the Solicitor General in 1953 but the required filing fee was paid only in 1956, barely 5V2 months prior to the filing of the petition for citizenship. This Court ruled that the declaration was not filed in accordance with the legal requirement that such declaration should be filed at least one year before the filing of the petition for citizenship. Citing Lazaro, this Court concluded that the filing of petitioner's declaration of intention on October 23, 1953 produced no legal effect until the required filing fee was paid on May 23, 1956.

In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were applied. It was an original petition for quo warranto contesting the right to office of proclaimed candidates which was mailed, addressed to the clerk of the Court of First Instance, within the one-week period after the proclamation as provided therefor by law. 10 However, the required docket fees were paid only after the expiration of said period. Consequently, this Court held that the date of such payment must be deemed to be the real date of filing of aforesaid petition and not the date when it was mailed.

Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee must be paid before a court will act on a petition or complaint. However, we also held that said rule is not applicable when petitioner seeks the probate of several wills of the same decedent as he is not required to file a separate action for each will but instead he may have other wills probated in the same special proceeding then pending before the same court.

Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is deemed filed only upon payment of the docket fee regardless of the actual date of its filing in court. Said case involved a complaint for recovery of ownership and possession of a parcel of land with damages filed in the Court of First Instance of Cebu. Upon the payment of P60.00 for the docket fee and P10.00 for the sheriffs fee, the complaint was docketed as Civil Case No. R-11882. The prayer of the complaint sought that the Transfer Certificate of Title issued in the name of the defendant be declared as null and void. It was also prayed that plaintiff be declared as owner thereof to whom the proper title should be issued, and that defendant be made to pay monthly rentals of P3,500.00 from June 2, 1948 up to the time the property is delivered to plaintiff, P500,000.00 as moral damages, attorney's fees in the amount of P250,000.00, the costs of the action and exemplary damages in the amount of P500,000.00.

The defendant then filed a motion to compel the plaintiff to pay the correct amount of the docket fee to which an opposition was filed by the plaintiff alleging that the action was for the recovery of a parcel of land so the docket fee must be based on its assessed value and that the amount of P60.00 was the correct docketing fee. The trial court ordered the plaintiff to pay P3,104.00 as filing fee.

The plaintiff then filed a motion to admit the amended complaint to include the Republic as the defendant. In the prayer of the amended complaint the exemplary damages earlier sought was eliminated. The amended prayer merely sought moral damages as the court may determine, attorney's fees of P100,000.00 and the costs of the action. The defendant filed an opposition to the amended complaint. The opposition notwithstanding, the amended complaint was admitted by the trial court. The trial court reiterated its order for the payment of the additional docket fee which plaintiff assailed and then challenged before this Court. Plaintiff alleged that he paid the total docket fee in the amount of P60.00 and that if he has to pay the additional fee it must be based on the amended complaint.

The question posed, therefore, was whether or not the plaintiff may be considered to have filed the case even if the docketing fee paid was not sufficient. In Magaspi, We reiterated the rule that the case was deemed filed only upon the payment of the correct amount for the docket fee regardless of the actual date of the filing of the complaint; that there was an honest difference of opinion as to the correct amount to be paid as docket fee in that as the action appears to be one for the recovery of property the docket fee of P60.00 was correct; and that as the action is also one, for damages, We upheld the assessment of the additional docket fee based on the damages alleged in the amended complaint as against the assessment of the trial court which was based on the damages alleged in the original complaint.

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However, as aforecited, this Court overturned Magaspi in Manchester. Manchester involves an action for torts and damages and specific performance with a prayer for the issuance of a temporary restraining order, etc. The prayer in said case is for the issuance of a writ of preliminary prohibitory injunction during the pendency of the action against the defendants' announced forfeiture of the sum of P3 Million paid by the plaintiffs for the property in question, the attachment of such property of defendants that may be sufficient to satisfy any judgment that may be rendered, and, after hearing, the issuance of an order requiring defendants to execute a contract of purchase and sale of the subject property and annul defendants' illegal forfeiture of the money of plaintiff. It was also prayed that the defendants be made to pay the plaintiff jointly and severally, actual, compensatory and exemplary damages as well as 25% of said amounts as may be proved during the trial for attorney's fees. The plaintiff also asked the trial court to declare the tender of payment of the purchase price of plaintiff valid and sufficient for purposes of payment, and to make the injunction permanent. The amount of damages sought is not specified in the prayer although the body of the complaint alleges the total amount of over P78 Millon allegedly suffered by plaintiff.

Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the docket fee based on the nature of the action for specific performance where the amount involved is not capable of pecuniary estimation. However, it was obvious from the allegations of the complaint as well as its designation that the action was one for damages and specific performance. Thus, this court held the plaintiff must be assessed the correct docket fee computed against the amount of damages of about P78 Million, although the same was not spelled out in the prayer of the complaint.

Meanwhile, plaintiff through another counsel, with leave of court, filed an amended complaint on September 12, 1985 by the inclusion of another co-plaintiff and eliminating any mention of the amount of damages in the body of the complaint. The prayer in the original complaint was maintained.

On October 15, 1985, this Court ordered the re-assessment of the docket fee in the said case and other cases that were investigated. On November 12, 1985, the trial court directed the plaintiff to rectify the amended complaint by stating the amounts which they were asking for. This plaintiff did as instructed. In the body of the complaint the amount of damages alleged was reduced to P10,000,000.00 but still no amount of damages was specified in the prayer. Said amended complaint was admitted.

Applying the principle in Magaspi that "the case is deemed filed only upon payment of the docket fee regardless of the actual date of filing in court," this Court held that the trial court did not acquire jurisdiction over the case by payment of only P410.00 for the docket fee. Neither can the amendment of the complaint thereby vest jurisdiction upon the Court. For all legal purposes there was no such original complaint duly filed which could be amended. Consequently, the order admitting the amended complaint and all subsequent proceedings and actions taken by the trial court were declared null and void. 13

The present case, as above discussed, is among the several cases of under-assessment of docket fee which were investigated by this Court together with Manchester. The facts and circumstances of this case are similar to Manchester. In the body of the original complaint, the total amount of damages sought amounted to about P50 Million. In the prayer, the amount of damages asked for was not stated. The action was for the refund of the premium and the issuance of the writ of preliminary attachment with damages. The amount of only P210.00 was paid for the docket fee. On January 23, 1986, private respondent filed an amended complaint wherein in the prayer it is asked that he be awarded no less than P10,000,000.00 as actual and

exemplary damages but in the body of the complaint the amount of his pecuniary claim is approximately P44,601,623.70. Said amended complaint was admitted and the private respondent was reassessed the additional docket fee of P39,786.00 based on his prayer of not less than P10,000,000.00 in damages, which he paid.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of P20,000,000.00 in damages so that his total claim is approximately P64,601,620.70. On October 16, 1986, private respondent paid an additional docket fee of P80,396.00. After the promulgation of the decision of the respondent court on August 31, 1987 wherein private respondent was ordered to be reassessed for additional docket fee, and during the pendency of this petition, and after the promulgation of Manchester, on April 28, 1988, private respondent paid an additional docket fee of P62,132.92. Although private respondent appears to have paid a total amount of P182,824.90 for the docket fee considering the total amount of his claim in the amended and supplemental complaint amounting to about P64,601,620.70, petitioner insists that private respondent must pay a docket fee of P257,810.49.

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.

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3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the court a quo is hereby instructed to reassess and determine the additional filing fee that should be paid by private respondent considering the total amount of the claim sought in the original complaint and the supplemental complaint as may be gleaned from the allegations and the prayer thereof and to require private respondent to pay the deficiency, if any, without pronouncement as to costs.

SO ORDERED.

Fernan (C.J), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Sun Insurance Office Ltd. vs Hon. Asuncion and Manuel Uy Po Tiong GR No. 79937-38 February 13, 1989

Facts:Sun insurance filed a case for the consignation of premiums on a fire insurance policy with a prayer for the judicial declaration of its nullity against private respondent Manuel Uy Po Tiong. Private respondent as declared in default for failure to file the required answer within the reglementary period. Meanwhile, the Respondent Manuel Tiong also filed a case against Sun Insurance for the refund of premiums and the issuance of a writ of preliminary attachment, seeking the payment of actual, compensatory, moral, exemplary and liquidated damages, attorney’s fees, expenses of litigation, and costs of suit, but the damages sought were not specifically stated in the prayer, although it may be inferred from the body of the complaint that it would amount to about P50M. In the body of the original complaint, the total amount of damages sought amounted to about P50 Million. In the prayer, the amount of damages asked for was not stated. The amount of only P210.00 was paid for the docket fee. On January 23, 1986, private respondent filed an amended complaint wherein in the prayer it is asked that he be awarded no less than P10,000,000.00 as actual and exemplary damages but in the body of the complaint the amount of his pecuniary claim is approximately P44,601,623.70. Said amended complaint was admitted and the private respondent was reassessed the additional docket fee of P39,786.00 based on his prayer of not less than P10,000,000.00 in damages, which he paid.On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of P20,000,000.00 in damages so that his total claim is approximately P64,601,620.70. On October 16, 1986, private respondent paid an additional docket fee of P80,396.00. After the promulgation of the decision of the respondent court on August 31, 1987 wherein private respondent was ordered to be reassessed for additional docket fee, and during the pendency of this petition, and after the promulgation of Manchester, on April 28, 1988, private respondent paid an additional docket fee of P62,132.92. Although private respondent appears to have paid a total amount of P182,824.90 for the docket fee considering the total amount of his claim in the amended and supplemental complaint amounting to about P64,601,620.70, petitioner insists that private respondent must pay a docket fee of P257,810.49.

Issue:Whether or not the court acquires jurisdiction when the correct and proper docket fee has not been paid?

Ruling:Manchester ruling applies, with modification. Statutes regulating the procedure of courts will be construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retrospective in that sense and in that respect.The Court dismissed petitioner’s motion and ordered the Clerk of court to re-asses the docket fees.

Personal Observation:The case is different in Manchester because the respondent herein has shown compliance by paying docket fees upon reassessment and has also paid the docket fees on its amended complaint increasing the claim for damages. Furthermore, there is no substantial evidence that the respondent has the intention of deliberately defraud the court or evaded the payment of docket fees.

Sun Insurance Office Ltd, E.B. Philips & D.J. Warby. v. Asuncion, Manuel Chua Uy Po Tiong G.R. Nos. 79937-38 February 13, 1989

Gancayco, [J.

Facts of the Case: Petitioner Sun Insurance (or SIOL) files a complaint for the annulment of a decision on the consignation of fire insurance policy. Subsequently, the Private Respondent (PR) files a complaint for the refund of premiums and the issuance of a writ of preliminary attachment in a civil case against SIOL. In addition, PR also claims for damages, attorney’s fees, litigation costs, etc., however, the prayer did not state the amount of damages sought although from the body of the complaint it can be inferred to be in amount of P 50 million. Hence, PR originally paid only PhP 210.00 in docket fees.The complaint underwent a number of amendments to make way for subsequent re-assessments of the amount of damages sought as well as the corresponding docket fees. The respondent demonstrated his willingness to abide by the rules by paying the additional docket fees as required.

Issue: Did the Court acquire jurisdiction over the case even if private respondent did not pay the correct or sufficient docket fees?

Ruling: It was held that 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. Same rule goes for permissive counterclaims, third party claims and similar pleadings.

In herein case, obviously, there was the intent on the part of PR to defraud the government of the docket fee due not only in the filing of the original complaint but also in the filing of the second amended complaint. However, a more liberal interpretation of the rules is called for considering that, unlike in Manchester, the private respondent demonstrated his willingness to abide by the rules by paying the additional docket fees as required.

Where a trial court acquires jurisdiction in like manner, but subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

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FIRST DIVISION

G.R. No. 89747 July 20, 1990

MAERSK-TABACALERA SHIPPING AGENCY (FILIPINAS), INC., petitioner, vs.THE HON. COURT OF APPEALS, MONET'S EXPORT AND MANUFACTURING CORPORATION AND/OR VICENTE TAGLE, respondents.

Bito, Lozada, Ortega & Castillo for petitioner.

Jesus F. Salazar for private respondent.

 

GRIÑO-AQUINO, J.:

This is a petition for review on certiorari of the decision dated July 12, 1989 of the Court of Appeals in CA-G.R. CV No. 18124 affirming that of the Regional Trial Court of Legaspi City in Civil Case No. 7480 which awarded damages to the plaintiff, now private respondent, Monet's Export and Manufacturing (Monet for short) against the petitioner Maersk- Tabacalera Shipping Agency (Filipinas), Inc., (Maersk for short) for breach of a (contract of carriage. The facts are stated in the decision of the Court of Appeals as follows:

On May 21, 1985, a complaint for damages was filed by plaintiff Monet's Export and Manufacturing Corporation (Monet's) and/or Vicente Tagle against defendants Maersk Tabacalera Shipping (Maersk) and the New Asia Enterprises (New Asia) and/or Manuel Ranola, alleging, among other things, that plaintiff, like defendant New Asia, is engaged in the export of locally-made handicrafts and products, while defendant Maersk Line is engaged in furnishing containerized services through which Monet's and New Asia normally ship their goods; that on March 11, 1984, plaintiff, after complying with all the export and custom requirements, loaded its goods in Maersk's container to be delivered on or before March 15, 1984 to Manila for immediate trans-shipment to its port of destination; that through fraud and malice, and without prior notice to Monet's, Maersk unloaded the goods at New Asia's factory site at Tagas, Daraga, Albay to give way to the latter's own export shipment; that Monet's shipment was later returned to its warehouse at Banag, Daraga, Albay; and that because of this occurrence, Monet's had to secure another shipper, thereby incurring unnecessary expenses as well as suffering mental anguish, worry and sleepless nights thinking of the possibility of losing its trading partners which would seriously doubt Monet's capacity as a respectable exporter. Monet's likewise alleged having suffered actual, moral and exemplary damages (p. 1, Record).

Answering the complaint, Maersk contended that contrary to Monet's allegations, the latter's shipment was loaded on March 10, 1984 in Maersk container subject to the condition that the bill of lading would be issued upon Monet's compliance with all the necessary export papers prior to the departure of the truck bearing said container for Manila on March 11, 1984.

Maersk further alleged that Monet's knew that the subject goods would not be brought to Manila without submitting all the necessary export papers, as without them, Maersk would incur charges on the cargo when deposited at the customs warehouse in Manila and would subsequently be not allowed to export the goods by custom authorities. (p. 16, Record).i•t•c-aüsl

Defendant New Asia, for its part, denied any liability in favor of Monet's, alleging that Monet's has no cause of action against it not being a party to the contract of carriage between Monet and Maersk (p. 24, Record).

Defendants during the hearing of February 17, 1986 were considered as in default for their failure to attend the scheduled pre-trial conference despite proper notice. Subsequently, the order of default in regard to defendant Maersk was lifted and the latter was allowed to cross-examine all the witnesses of Monet's. Defendant New Asia did not move for the lifting of the order of default and accordingly remained as in default. (p. 204, Record.)

On March 28, 1988, the appealed judgment was rendered:

WHEREFORE, premises considered, defendant Maersk Shipping Line is found to be liable to plaintiff for damages in the following amounts: For breach of contract of carriage, P50,000.00; for moral damages brought about by the wanton bad faith employed by defendant shipping line in the performance of its contractual obligation, P50,000.00; and as exemplary damages, another P50,000.00 and for attomey's fees, P20,000.00.

Defendant New Asia Enterprises is exonerated of any liability, there being no valid cause of action by plaintiff against it. New Asia Enterprises cannot be made answerable for whatever action or violation of contracted obligation defendant Maersk Line may have committed against plaintiff because they are 2 separate corporations and there is no proof of any collusion between them. (pp. 27-28, Rollo.)

Maersk appealed to the Court of Appeals which affirmed the judgment of the trial court on July 12, 1989.

Hence, the instant petition wherein Maersk raises the following issues:

1. Respondent court erred in affirming the judgment of the trial court despite the obvious fact that the trial court never acquired jurisdiction over the subject-matter of the action because private respondents did not specify their claims for damages and the correct filing fees were not paid.

2. It was error for respondent court to have awarded P50,000.00 for "breach of contract" because this is not a form of damage and petitioner has a right to know for what it is being made to pay.

3. Respondent court erred also in awarding moral damages to a corporation that was not shown to have a good reputation that was damaged.

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4. Again, respondent court erred in awarding exemplary damages in the absense of evidence that petitioner acted in a wanton or malevolent manner.

5. Finally, respondent court erred in awarding attorney's fees without any explanation for such an award. (pp. 13-14, Rollo.)

Petitioner's allegation that the decisions of the trial court and the Court of Appeals were void for lack of jurisdiction (p. 75, Rollo) as Monet did not pay the correct filing fee on its claims for actual, moral and exemplary damages, the amounts of which were not specified in the body and prayer of its complaint, is anchored in the following ruling of this Court in Manchester Development Corporation vs. CA (149 SCRA 526 [1987]) —

... the trial court did not acquire jurisdiction over the case by the payment of only P410.00 as docket fee. ...

To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assestment of the filing fees in any case. Any pleading that fails to comply with the requirement shall not be accepted nor admitted, or shall otherwise be expunged from the record.

The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the court, much less the payment of the docket fee based on the amounts sought in the amended pleading. (Emphasis supplied; pp. 568-569.)

Unlike Manchester, however, where the jurisdictional issue arising from insufficiency of the docket fee paid, was seasonably raised in the answer of the defendant in the trial court, in this case the issue is being raised for the first time in this Court. Petitioner submitted to the jurisdiction of the trial court without question. It filed a counterclaim seeking affirmative reliefs, and actively took part in the trial (p. 53, Rollo). A party who voluntarily participates in the trial cannot later on raise the issue of the court's lack of jurisdiction (Tan Boon Bee & Co. v. Judge Jarencio, 163 SCRA 205).

Maersk should have raised its objection to the trial court s jurisdiction when the case was still in that court. It should not have waited for an adverse decision by the Court of Appeals before waking up to raise the question of jurisdiction. As this Court remarked in Tijam v. Sibonghanoy, 23 SCRA 29, 37:

Were we to sanction such conduct on its part, We would in effect be declaring as useless all the proceedings had in the present case since it was commenced ... and compel the judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but revolting.

A party may be barred by laches from invoking his plea (of lack of jurisdiction) for the first time on appeal for the purpose of annulling everything done in the case with the active participation of said party invoking the plea. (Tijam vs. Sibonghanoy, 23 SCRA 29, 34.)

Since this is a case where some of the claims (for moral and exemplary damages) were not specified in the plaintiff s pleading and were left for determination by the court, the applicable rule is the third rule set out in the decision of this Court in Sun Insurance Office Ltd., et al. vs. Hon. Maximiano Asuncion, et al., 170 SCRA 274, to wit:

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefore shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

The Clerk of Court of the trial court shall assess and collect the proper additional fees on the totality of the judgment for the private respondent (Id).

Monet's counsel in the trial court, Attorney Jesus Salazar, is hereby reprimanded for his unethical practice of not specifying the amount of damages sought in the body and prayer of his complaint in order to defraud the Government of the proper fee for docketing said complaint. He is warned that a repetition of that malpractice will be dealt with more severely.

WHEREFORE, the petition for certiorari is denied for lack of merit. However, the Clerk of Court of the trial court shall assess and collect the fees due on the judgment as if the same amounts were specified in the complaint. Costs against the petitioner.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Medialdea, JJ., concur.

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SECOND DIVISION

[G.R. No. 144934.  January 15, 2004]

ADELFA S. RIVERA, CYNTHIA S. RIVERA, and JOSE S. RIVERA, petitioners, vs. FIDELA DEL ROSARIO (deceased and substituted by her co-respondents), and her children, OSCAR, ROSITA, VIOLETA, ENRIQUE JR., CARLOS, JUANITO and ELOISA, all surnamed DEL ROSARIO, respondents.

D E C I S I O N

QUISUMBING, J.:

Before us is a petition for review on certiorari of the Court of Appeals’ decision, dated November 29, 1999, in CA-G.R. CV No. 60552, which affirmed the judgment of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 17, in Civil Case No. 151-M-93.  The RTC granted respondents’ complaint for nullity of contract of sale and annulment of the transfer certificates of title issued in favor of petitioners.

The facts, as found by the Court of Appeals, are as follows:

Respondents Fidela (now deceased), Oscar, Rosita, Violeta, Enrique Jr., Carlos, Juanito and Eloisa, all surnamed Del Rosario, were the registered owners of Lot No. 1083-C, a parcel of land situated at Lolomboy, Bulacan.  This lot spanned an area of 15,029 square meters and was covered by TCT No. T-50.668 (M) registered in the Registry of Deeds of Bulacan.

On May 16, 1983, Oscar, Rosita, Violeta, Enrique Jr., Juanito, and Eloisa, executed a Special Power of Attorney in favor of their mother and co-respondent, Fidela, authorizing her to sell, lease, mortgage, transfer and convey their rights over Lot No. 1083-C. Subsequently, Fidela borrowed P250,000 from Mariano Rivera in the early part of 1987.  To secure the loan, she and Mariano Rivera agreed to execute a deed of real estate mortgage and an agreement to sell the land.  Consequently, on March 9, 1987, Mariano went to his lawyer, Atty. Efren Barangan, to have three documents drafted: the Deed of Real Estate Mortgage, a Kasunduan (Agreement to Sell), and a Deed of Absolute Sale.

The Kasunduan provided that the children of Mariano Rivera, herein petitioners Adelfa, Cynthia and Jose, would purchase Lot No. 1083-C for a consideration of P2,141,622.50.  This purchase price was to be paid in three installments: P250,000 upon the signing of the Kasunduan, P750,000 on August 31, 1987, and P1,141,622.50 on December 31, 1987. It also provided that the Deed of Absolute Sale would be executed only after the second installment is paid and a postdated check for the last installment is deposited with Fidela. As previously stated, however, Mariano had already caused the drafting of the Deed of Absolute Sale.  But unlike the Kasunduan, the said deed stipulated a purchase price of only P601,160, and covered a certain Lot No. 1083-A in addition to Lot No. 1083-C. This deed, as well as the Kasunduan and the Deed of Real Estate Mortgage, was signed by Mariano’s children, petitioners Adelfa, Cynthia and Jose, as buyers and mortgagees, on March 9, 1987.

The following day, Mariano Rivera returned to the office of Atty. Barangan, bringing with him the signed documents.  He also brought with him Fidela and her son Oscar del Rosario, so that the latter two may sign the mortgage and the Kasunduan there.

Although Fidela intended to sign only the Kasunduan and the Real Estate Mortgage, she inadvertently affixed her signature on all the three documents in the office of Atty. Barangan on the said day, March 10, 1987.  Mariano then gave Fidela the amount of P250,000.  On October 30, 1987, he also gave Fidela a check for P200,000.  In the ensuing months, also, Mariano gave Oscar del Rosario several amounts totaling P67,800 upon the latter’s demand for the payment of the balance despite Oscar’s lack of authority to receive payments under the Kasunduan. While Mariano was making payments to Oscar, Fidela entrusted the owner’s copy of TCT No. T-50.668 (M) to Mariano to guarantee compliance with the Kasunduan.

When Mariano unreasonably refused to return the TCT, one of the respondents, Carlos del Rosario, caused the annotation on TCT No. T-50.668 (M) of an Affidavit of Loss of the owner’s duplicate copy of the title on September 7, 1992.  This annotation was offset, however, when Mariano registered the Deed of Absolute Sale on October 13, 1992, and afterwards caused the annotation of an Affidavit of Recovery of Title on October 14, 1992.  Thus, TCT No. T-50.668 (M) was cancelled, and in its place was issued TCT No. 158443 (M) in the name of petitioners Adelfa, Cynthia and Jose Rivera.

Meanwhile, the Riveras, representing themselves to be the new owners of Lot No. 1083-C, were also negotiating with the tenant, Feliciano Nieto, to rid the land of the latter’s tenurial right.  When Nieto refused to relinquish his tenurial right over 9,000 sq. m. of the land, the Riveras offered to give 4,500 sq. m. in exchange for the surrender.  Nieto could not resist and he accepted.  Subdivision Plan No. Psd-031404-052505 was then made on August 12, 1992.  Later, it was inscribed on TCT No. 158443 (M), and Lot No. 1083-C was divided into Lots 1083 C-1 and 1083 C-2.

To document their agreement with Feliciano Nieto, the Riveras executed a Kasulatan sa Pagtatakwil ng Karapatan sa Pagmamay-ari ng Bahagi ng Isang Lagay na Lupa (Written Abdication of Rights over a Portion of a Parcel of Land) on November 16, 1992.  Four days later, they registered the document with the Registry of Deeds.  Two titles were then issued: TCT No. T-161784 (M) in the name of Nieto, for 4,500 sq. m.  of land, and TCT No. T-161785 (M) in the name of petitioners Adelfa, Cynthia and Jose Rivera, over the remaining 10,529 sq. m. of land.

On February 18, 1993, respondents filed a complaint in the Regional Trial Court of Malolos, asking that the Kasunduan be rescinded for failure of the Riveras to comply with its conditions, with damages. They also sought the annulment of the Deed of Absolute Sale on the ground of fraud, the cancellation of TCT No. T-161784 (M) and TCT No. T-161785 (M), and the reconveyance to them of the entire property with TCT No. T-50.668 (M) restored.

Respondents claimed that Fidela never intended to enter into a deed of sale at the time of its execution and that she signed the said deed on the mistaken belief that she was merely signing copies of the Kasunduan.  According to respondents, the position where Fidela’s name was typed and where she was supposed to sign her name in the Kasunduan was roughly in the same location where it was typed in the Deed of Absolute Sale.  They argued that given Fidela’s advanced age (she was then around 72 at the time) and the fact that the documents were stacked one on top of the other at the time of signing, Fidela could have easily and mistakenly presumed that she was merely signing additional copies of the Kasunduan. They also alleged that petitioners acquired possession of the TCT through fraud and machination.

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In their defense, petitioners denied the allegations and averred that the Deed of Absolute Sale was validly entered into by both parties.  According to petitioners, Fidela del Rosario mortgaged Lot No. 1083-C to their predecessor in interest, Mariano Rivera, on March 9, 1987.  But on the following day Fidela decided to sell the lot to petitioners for P2,161,622.50.  When Mariano agreed (on the condition that Lot No. 1083-C will be delivered free from all liens and encumbrances), the Kasunduan was consequently drawn up and signed.  After that, however, Fidela informed Mariano of the existence of Feliciano Nieto’s tenancy right over the lot to the extent of 9,000 sq. m.  When Mariano continued to want the land, albeit on a much lower price of only P601,160, as he had still to deal with Feliciano Nieto, the parties drafted the Deed of Absolute Sale on March 10, 1987, to supersede the Kasunduan.

Petitioners likewise argued that respondents’ cause of action had been barred by laches or estoppel since more than four years has lapsed from the time the parties executed the Deed of Absolute Sale on March 10, 1987, to the time respondents instituted their complaint on February 18, 1993.

Petitioners also filed a counterclaim asking for moral and exemplary damages and the payment of attorney’s fees and costs of suit.

After trial, the RTC ruled in favor of respondents:

WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:

1.       Declaring the Deed of Absolute Sale dated March 10, 1987 as null and void;

2.       Annulling TCT No. T-158443 (M) and TCT No. T-161785 (M) both in the names of Adelfa, Cynthia and Jose, all surnamed Rivera;

3.       Declaring the plaintiffs to be the legitimate owners of the land covered by TCT No. T-161785 (M) and ordering defendant Adelfa, Cynthia, and Jose, all surnamed Rivera, to reconvey the same to the plaintiffs;

4.       Ordering the Register of Deeds of Bulacan to cancel TCT No. T-161785 (M) and to issue in its place a new certificate of title in the name of the plaintiffs as their names appear in TCT No. T-50.668;

5.       Declaring TCT No. T-161784 (M) in the name of Feliciano Nieto as valid;

6.       Ordering the defendant Riveras to pay the plaintiffs solidarily the following amounts:

a)           P191,246.98 as balance for the 4,500 square-meter portion given to defendant Feliciano Nieto

b)           P200,000.00 as moral damages

c)           P50,000.00 as exemplary damages

d)           P50,000.00 as attorney’s fees

e)           costs of the suit.

7.       Dismissing the counterclaim of the defendant Riveras;

8.       Dismissing the counterclaim and the crossclaim of defendant Feliciano Nieto.

SO ORDERED.

The trial court ruled that Fidela’s signature in the Deed of Absolute Sale was genuine, but found that Fidela never intended to sign the said deed.  Noting the peculiar differences between the Kasunduan and the Deed of Absolute Sale, the trial court concluded that the Riveras were guilty of fraud in securing the execution of the deed and its registration in the Registry of Deeds. This notwithstanding, the trial court sustained the validity of TCT No. T-161784 (M) in the name of Feliciano Nieto since there was no fraud proven on Nieto’s part.  The trial court found him to have relied in good faith on the representations of ownership of Mariano Rivera.  Thus, Nieto’s rights, according to the trial court, were akin to those of an innocent purchaser for value.

On the foregoing, the trial court rescinded the Kasunduan but ruled that the P450,000 paid by petitioners be retained by respondents as payment for the 4,500 sq. m. portion of Lot No. 1083-C that petitioners gave to Nieto. The trial court likewise ordered petitioners to pay P191,246.98 as balance for the price of the land given to Nieto, P200,000 as moral damages, P50,000 as exemplary damages, P50,000 as attorney’s fees, and the costs of suit.

On appeal to the Court of Appeals, the trial court’s judgment was modified as follows:

WHEREFORE, the judgment appealed from is hereby AFFIRMED with the MODIFICATION that the Deed of Absolute Sale dated March 10, 1987 is declared null and void only insofar as Lot No. 1083-C is concerned, but valid insofar as it conveyed Lot No. 1083-A, that TCT No. 158443 (M) is valid insofar as Lot No. 1083-A is concerned and should not be annulled, and increasing the amount to be paid by the defendants-appellants to the plaintiffs-appellees for the 4,500 square meters of land given to Feliciano Nieto to P323,617.50.

Costs against the defendants-appellants.

SO ORDERED.

Petitioners’ motion for reconsideration was denied.  Hence, this petition. 

While this petition was pending, respondent Fidela del Rosario died.  She was substituted by her children, herein respondents.

In this petition, petitioners rely on the following grounds: 

I

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THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS, GRAVE AND REVERSIBLE ERROR IN AWARDING LOT 1083-A IN FAVOR OF THE PETITIONERS AND FELICIANO NIETO WHICH IS ADMITTEDLY A PART AND PORTION OF THE EXISTING NORTH LUZON EXPRESSWAY AND AS SUCH ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION, OR WITH GRAVE ABUSE OF JUDICIAL DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.

II

RESPONDENTS FAILED TO PAY THE CORRECT DOCKET, FILING AND OTHER LAWFUL FEES WITH THE OFFICE OF THE CLERK OF COURT OF THE COURT A QUO (RTC, MALOLOS, BULACAN) AT THE TIME OF THE FILING OF THE ORIGINAL COMPLAINT IN 1993 PURSUANT TO THE SIOL DOCTRINE.

III

[THE] TRIAL COURT AWARDED RELIEFS NOT SPECIFICALLY PRAYED FOR IN THE AMENDED COMPLAINT WITHOUT REQUIRING THE PAYMENT OF THE CORRECT DOCKET, FILING AND OTHER LAWFUL FEES.

IV

THE COURT A QUO HAS NO JURISDICTION OVER THE RESPONDENTS’ CAUSE OF ACTION AND OVER THE RES CONSIDERING THAT FELICIANO NIETO IS AN AGRICULTURAL TENANT OF THE RICELAND IN QUESTION.

V

RESPONDENTS[’] MAIN CAUSE OF ACTION [IS] FOR RESCISSION OF CONTRACT WHICH IS SUBSIDIARY IN NATURE[,] AND ANNULMENT OF SALE[,] BOTH OF WHICH HAVE ALREADY PRESCRIBED UNDER ARTICLES 1389 AND 1391 OF THE CIVIL CODE.

Petitioners’ assignment of errors may be reduced into three issues: (1) Did the trial court acquire jurisdiction over the case, despite an alleged deficiency in the amount of filing fees paid by respondents and despite the fact that an agricultural tenant is involved in the case?  (2) Did the Court of Appeals correctly rule that the Deed of Absolute Sale is valid insofar as Lot 1083-A is concerned?  (3) Is the respondents’ cause of action barred by prescription?

On the first issue, petitioners contend that jurisdiction was not validly acquired because the filing fees respondents paid was only P1,554.45 when the relief sought was reconveyance of land that was worth  P2,141,622.50 under the Kasunduan.  They contend that respondents should have paid filing fees amounting to P12,183.70.  In support of their argument, petitioners invoke the doctrine in Sun Insurance Office, Ltd., (SIOL) v. Asuncion and attach a certification from the Clerk of Court of the RTC of Quezon City.

Respondents counter that it is beyond dispute that they paid the correct amount of docket fees when they filed the complaint.  If the assessment was inadequate, they could not be faulted because the clerk of court made no notice of demand or reassessment, respondents argue. 

Respondents also add that since petitioners failed to contest the alleged underpayment of docket fees in the lower court, they cannot raise the same on appeal.

We rule in favor of respondents. Jurisdiction was validly acquired over the complaint.  In Sun Insurance Office, Ltd., (SIOL) v. Asuncion, this Court ruled that the filing of the complaint or appropriate initiatory pleading and the payment of the prescribed docket fee vest a trial court with jurisdiction over the subject matter or nature of the action.  If the amount of docket fees paid is insufficient considering the amount of the claim, the clerk of court of the lower court involved or his duly authorized deputy has the responsibility of making a deficiency assessment.  The party filing the case will be required to pay the deficiency, but jurisdiction is not automatically lost.

Here it is beyond dispute that respondents paid the full amount of docket fees as assessed by the Clerk of Court of the Regional Trial Court of Malolos, Bulacan, Branch 17, where they filed the complaint.  If petitioners believed that the assessment was incorrect, they should have questioned it before the trial court.  Instead, petitioners belatedly question the alleged underpayment of docket fees through this petition, attempting to support their position with the opinion and certification of the Clerk of Court of another judicial region.  Needless to state, such certification has no bearing on the instant case.

Petitioners also contend that the trial court does not have jurisdiction over the case because it involves an agricultural tenant.  They insist that by virtue of Presidential Decree Nos. 316 and 1038, it is the Department of Agrarian Reform Adjudication Board (DARAB) that has jurisdiction.

Petitioners’ contention lacks merit.  The DARAB has exclusive original jurisdiction over cases involving the rights and obligations of persons engaged in the management, cultivation and use of all agricultural lands covered by the Comprehensive Agrarian Reform Law. However, the cause of action in this case is primarily against the petitioners, as indispensable parties, for rescission of the Kasunduan and nullification of the Deed of Sale and the TCTs issued because of them.  Feliciano Nieto was impleaded merely as a necessary party, stemming from whatever rights he may have acquired by virtue of the agreement between him and the Riveras and the corresponding TCT issued.  Hence, it is the regular judicial courts that have jurisdiction over the case.

On the second issue, contrary to the ruling of the Court of Appeals that the Deed of Absolute Sale is void only insofar as it covers Lot No. 1083-C, we find that the said deed is void in its entirety.  Noteworthy is that during the oral arguments before the Court of Appeals, both petitioners and respondents admitted that Lot No. 1083-A had been expropriated by the government long before the Deed of Absolute Sale was entered into. What’s more, this case involves only Lot No. 1083-C.  It never involved Lot 1083-A.  Thus, the Court of Appeals had no jurisdiction to adjudicate on Lot 1083-A, as it was never touched upon in the pleadings or made the subject of evidence at trial.

As to the third issue, petitioners cite Articles 1383, 1389 and 1391 of the New Civil Code.  They submit that the complaint for rescission of the Kasunduan should have been dismissed, for respondents’ failure to prove that there was no other legal means available to obtain reparation other than to file a case for rescission, as required by Article 1383.  Moreover, petitioners contend that even assuming respondents had satisfied this requirement, prescription had already set in, the complaint having been filed in 1992 or five years after the execution of the Deed of Absolute Sale in March 10, 1987.

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Respondents counter that Article 1383 of the New Civil Code applies only to rescissible contracts enumerated under Article 1381 of the same Code, while the cause of action in this case is for rescission of a reciprocal obligation, to which Article 1191 of the Code applies.  They assert that their cause of action had not prescribed because the four-year prescriptive period is counted from the date of discovery of the fraud, which, in this case, was only in 1992.

Rescission of reciprocal obligations under Article 1191 of the New Civil Code should be distinguished from rescission of contracts under Article 1383 of the same Code.  Both presuppose contracts validly entered into as well as subsisting, and both require mutual restitution when proper, nevertheless they are not entirely identical.

In countless times there has been confusion between rescission under Articles 1381 and 1191 of the Civil Code.  Through this case we again emphasize that rescission of reciprocal obligations under Article 1191 is different from rescissible contracts under Chapter 6 of the law on contracts under the Civil Code. While Article 1191 uses the term rescission, the original term used in Article 1124 of the old Civil Code, from which Article 1191 was based, was resolution. Resolution is a principal action that is based on breach of a party, while rescission under Article 1383 is a subsidiary action limited to cases of rescission for lesion under Article 1381 of the New Civil Code, which expressly enumerates the following rescissible contracts:

ART. 1381. The following contracts are rescissible:

(1)     Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof;

(2)     Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number;

(3)     Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them;

(4)     Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority;

(5)     All other contracts specially declared by law to be subject to rescission.

Obviously, the Kasunduan does not fall under any of those situations mentioned in Article 1381.  Consequently, Article 1383 is inapplicable.  Hence, we rule in favor of the respondents.

May the contract entered into between the parties, however, be rescinded based on Article 1191?

A careful reading of the Kasunduan reveals that it is in the nature of a contract to sell, as distinguished from a contract of sale.  In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive

condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.

Respondents in this case bound themselves to deliver a deed of absolute sale and clean title covering Lot No. 1083-C after petitioners have made the second installment.  This promise to sell was subject to the fulfillment of the suspensive condition that petitioners pay P750,000 on August 31, 1987, and deposit a postdated check for the third installment of P1,141,622.50.  Petitioners, however, failed to complete payment of the second installment.  The non-fulfillment of the condition rendered the contract to sell ineffective and without force and effect.  It must be stressed that the breach contemplated in Article 1191 of the New Civil Code is the obligor’s failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation. Failure to pay, in this instance, is not even a breach but an event that prevents the vendor’s obligation to convey title from acquiring binding force.  Hence, the agreement of the parties in the instant case may be set aside, but not because of a breach on the part of petitioners for failure to complete payment of the second installment.  Rather, their failure to do so prevented the obligation of respondents to convey title from acquiring an obligatory force.

Coming now to the matter of prescription.  Contrary to petitioners’ assertion, we find that prescription has not yet set in.  Article 1391 states that the action for annulment of void contracts shall be brought within four years.  This period shall begin from the time the fraud or mistake is discovered.  Here, the fraud was discovered in 1992 and the complaint filed in 1993.  Thus, the case is well within the prescriptive period.

On the matter of damages, the Court of Appeals awarded respondents P323,617.50 as actual damages for the loss of the land that was given to Nieto, P200,000 as moral damages, P50,000 as exemplary damages, P50,000 as attorney’s fees and the costs of suit.  Modifications are in order, however.

Moral damages may be recovered in cases where one willfully causes injury to property, or in cases of breach of contract where the other party acts fraudulently or in bad faith. Exemplary damages are imposed by way of example or correction for the public good, when the party to a contract acts in a wanton, fraudulent, oppressive or malevolent manner. Attorney’s fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest.

While it has been sufficiently proven that the respondents are entitled to damages, the actual amounts awarded by the lower court must be reduced because damages are not intended for a litigant’s enrichment, at the expense of the petitioners. The purpose for the award of damages other than actual damages would be served, in this case, by reducing the amounts awarded.

Respondents were amply compensated through the award of actual damages, which should be sustained.  The other damages awarded total P300,000, or almost equivalent to the amount of actual damages.  Practically this will double the amount of actual damages awarded to respondents.  To avoid breaching the doctrine on enrichment, award for damages other than actual should be reduced.  Thus, the amount of moral damages should be set at only P30,000, and the award of exemplary damages at only P20,000.  The award of attorney’s fees should also be reduced to P20,000, which under the circumstances of this case appears justified and reasonable.

WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED. The Deed of Absolute Sale in question is declared NULL and VOID in its entirety. Petitioners are ORDERED

29

to pay respondents P323,617.50 as actual damages, P30,000.00 as moral damages, P20,000.00 as exemplary damages and P20,000.00 as attorney’s fees. No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

RIVERA vs. DEL ROSARIOG.R. No. 144934 January 15, 2004

Facts:

Del Rosario is the registered owners of Lot No. 1083-C, a parcel of land situated at Lolomboy, Bulacan.

Fidela del Rosario borrowed P250,000 from Mariano Rivera in the early part of 1987. To secure the loan, she and Mariano Rivera agreed to execute a deed of real estate mortgage and an agreement to sell the land. Consequently, Mariano drafted the Deed of Real Estate Mortgage, a Kasunduan (Agreement to Sell), and a Deed of Absolute Sale.

The Kasunduan provided the Riveras would purchase the lot for P2.1M. There were 3 installments:o 250 K upon the signing of the Kasunduano 750K on August 31, 1987o 1.1M on December 31, 1987.

The Deed of Absolute Sale would be executed only after the second installment is paid and a postdated check for the last installment is deposited with Fidela.

Although Fidela intended to sign only the Kasunduan & the real estate mortgage, she inadvertently affixed her signature on all 3 documents.

Rivera failed to complete the payment in the 2nd installment.

Respondents filed a complaint asking for the rescission of Kasunduan for failure of Rivera’s to comply with its condition’s. They also sought the annulment of the deed of absolute sale on the ground of fraud & the reconveyance of the entire property.

Petitioners say that there can be no rescission because in accordance with Article 1383, the del Rosarios must show that there were no other legal means available to obtain reparation other than to file a case for rescission.

NB: Nieto was the tenant of the property. When the Riveras showed to Nieto that they were the new owners, he desisted from vacating the property. The Riveras agreed to give him a small piece of the land in question.

The RTC declared the deed of absolute sale as null and void. The CA modified the RTC’s decision insofar as it deemed the portion pertaining to Nieto as valid.

Issue:

WON the contract entered into between the parties may be rescinded based on Art 1191? NOWON the deed of absolute sale is null and void in its entirety as opposed to the CA’s decision of validity pertaining to Nieto’s share? YES, VOID IN ITS ENTIRETY

Held:

The Kasunduan reveals that it is in the nature of a contract to sell, as distinguished from a contract of sale. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.

Respondents bound themselves to deliver a deed of absolute sale and clean title after petitioners have made the second installment. This promise to sell was subject to the fulfillment of the suspensive condition. Petitioners however failed to complete payment of the second installment. The non-fulfillment of the condition rendered the contract to sell ineffective and without force and effect. It must be stressed that the breach contemplated in Article 1191 of the New Civil Code is the obligor’s failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation. Failure to pay, in this instance, is not even a breach but an event that prevents the vendor’s obligation to convey title from acquiring binding force. Hence, the agreement of the parties in the instant case may be set aside, but not because of a breach on the part of petitioners for failure to complete payment of the second installment. Rather, their failure to do so prevented the obligation of respondents to convey title from acquiring an obligatory force.

While Article 1191 uses the term rescission, the original term used in Article 1124 of the old Civil Code, from which Article 1191 was based, was resolution.46 Resolution is a principal action that is based on breach of a party, while rescission under Article 1383 is a subsidiary action limited to cases of rescission for lesion under Article 1381 of the New Civil Code.

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SECOND DIVISION

[G.R. No. 140954.  April 12, 2005]

HEIRS OF BERTULDO[1] HINOG: Bertuldo Hinog II, Bertuldo Hinog III, Bertuldo Hinog, Jr., Jocelyn Hinog, Bertoldo Hinog IV, Bertoldo Hinog V, Edgardo Hinog, Milagros H. Pabatao, Lilian H. King, Victoria H. Engracia, Terisita C. Hinog, Paz H. Besana, Roberto C. Hinog, Vicente C. Hinog, Roel C. Hinog, Marilyn C. Hinog, Bebot C. Hinog, lordes C. Hinog, Pablo Chiong, Arlene Lanasang (All respresented by Bertuldo Hinog III), petitioners, vs. HON. ACHILLES MELICOR, in his capacity as Presiding Judge, RTC, Branch 4, 7th Judicial Region, Tagbiliran City, Bohol, and CUSTODIO BALANE, RUFO BALANE, HONORIO BALANE, and TOMAS BALANE, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of Court which assails the Orders dated March 22, 1999, August 13, 1999 and October 15, 1999 of the Regional Trial Court, Branch 4, of Tagbilaran City, Bohol in Civil Case No. 4923.

The factual background of the case is as follows:

On May 21, 1991, private respondents Custodio, Rufo, Tomas and Honorio, all surnamed Balane, filed a complaint for “Recovery of Ownership and Possession, Removal of Construction and Damages” against Bertuldo Hinog (Bertuldo for brevity).  They alleged that: they own a 1,399- square meter parcel of land situated in Malayo Norte, Cortes, Bohol, designated as Lot No. 1714; sometime in March 1980, they allowed Bertuldo to use a portion of the said property for a period of ten years and construct thereon a small house of light materials at a nominal annual rental of P100.00 only, considering the close relations of the parties; after the expiration of the ten-year period, they demanded the return of the occupied portion and removal of the house constructed thereon but Bertuldo refused and instead claimed ownership of the entire property.

Accordingly, private respondents sought to oust Bertuldo from the premises of the subject property and restore upon themselves the ownership and possession thereof, as well as the payment of moral and exemplary damages, attorney’s fees and litigation expenses “in amounts justified by the evidence.” [2]

On July 2, 1991, Bertuldo filed his Answer. He alleged ownership of the disputed property by virtue of a Deed of Absolute Sale dated July 2, 1980, executed by one Tomas Pahac with the knowledge and conformity of private respondents.[3]

After the pre-trial, trial on the merits ensued. On November 18, 1997, private respondents rested their case.  Thereupon, Bertuldo started his direct examination.  However, on June 24, 1998, Bertuldo died without completing his evidence.

On August 4, 1998, Atty. Sulpicio A. Tinampay withdrew as counsel for Bertuldo as his services were terminated by petitioner Bertuldo Hinog III.  Atty. Veronico G. Petalcorin then entered his appearance as new counsel for Bertuldo.[4]

On September 22, 1998, Atty. Petalcorin filed a motion to expunge the complaint from the  record  and  nullify  all  court  proceedings  on the ground that private respondents  failed  to specify  in  the  complaint  the  amount  of damages claimed so as to pay the correct docket fees; and that under Manchester Development Corporation vs. Court of Appeals,[5] non-payment of the correct docket fee is jurisdictional.[6]

In an amended motion, filed on October 2, 1998, Atty. Petalcorin further alleged that the private respondents failed to pay the correct docket fee since the main subject matter of the case cannot be estimated as it is for recovery of ownership, possession and removal of construction.[7]

Private respondents opposed the motion to expunge on the following grounds: (a) said motion was filed more than seven years from the institution of the case;  (b) Atty. Petalcorin has not complied with Section 16, Rule 3 of the Rules of Court which provides that the death of the original defendant requires a substitution of parties before a lawyer can have legal personality to represent a litigant and the motion to expunge does not mention of any specific party whom he is representing; (c) collectible fees due the court can be charged as lien on the judgment; and (d) considering the lapse of time, the motion is merely a dilatory scheme employed by petitioners.[8]

In their Rejoinder, petitioners manifested that the lapse of time does not vest the court with jurisdiction over the case due to failure to pay the correct docket fees.  As to the contention that deficiency in payment of docket fees can be made as a lien on the judgment, petitioners argued that the payment of filing fees cannot be made dependent on the result of the action taken.[9]

On January 21, 1999, the trial court, while ordering the complaint to be expunged from the records and the nullification of all court proceedings taken for failure to pay the correct docket fees, nonetheless, held:

The Court can acquire jurisdiction over this case only upon the payment of the exact prescribed docket/filing fees for the main cause of action, plus additional docket fee for the amount of damages being prayed for in the complaint, which amount should be specified so that the same can be considered in assessing the amount of the filing fees.  Upon the complete payment of such fees, the Court may take appropriate action in the light of the ruling in the case of Manchester Development Corporation vs. Court of Appeals, supra.[10]

Accordingly, on January 28, 1999, upon payment of deficiency docket fee, private respondents filed a manifestation with prayer to reinstate the case.[11] Petitioners opposed the reinstatement[12] but on March 22, 1999, the trial court issued the first assailed Order reinstating the case.[13]

On May 24, 1999, petitioners, upon prior leave of court,[14] filed their supplemental pleading, appending therein a Deed of Sale dated November 15, 1982.[15] Following the submission of private respondents’ opposition thereto,[16] the trial court, in its Order dated July 7, 1999, denied the supplemental pleading on the ground that the Deed of Absolute Sale is a new matter which was never mentioned in the original answer dated July 2, 1991, prepared by Bertuldo’s original counsel and which Bertuldo verified; and that such new document is deemed waived in the light

31

of Section 1, Rule 9[17] of the Rules of Court.  The trial court also noted that no formal substitution of the parties was made because of the failure of defendant’s counsel to give the names and addresses of the legal representatives of Bertuldo, so much so that the supposed heirs of Bertuldo are not specified in any pleading in the case. [18]

On July 14, 1999, petitioners manifested that the trial court having expunged the complaint and nullified all court proceedings, there is no valid case and the complaint should not be admitted for failure to pay the correct docket fees; that there should be no case to be reinstated and no case to proceed as there is no complaint filed.[19]

After the submission of private respondents’ opposition[20] and petitioners’ rejoinder,[21] the trial court issued the second assailed Order on August 13, 1999, essentially denying petitioners’ manifestation/rejoinder.  The trial court held that the issues raised in such manifestation/rejoinder are practically the same as those raised in the amended motion to expunge which had already been passed upon in the Order dated January 21, 1999.  Moreover, the trial court observed that the Order dated March 22, 1999 which reinstated the case was not objected to by petitioners within the reglementary period or even thereafter via a motion for reconsideration despite receipt thereof on March 26, 1999.[22]

On August 25, 1999, petitioners filed a motion for reconsideration[23] but the same was denied by the trial court in its third assailed Order dated October 15, 1999. The trial court held that the Manchester rule was relaxed in Sun Insurance Office, Ltd. vs. Asuncion.[24] Noting that there has been no substitution of parties following the death of Bertuldo, the trial court directed Atty. Petalcorin to comply with the provisions of Section 16, Rule 3 of the Rules of Court.  The trial court also reiterated that the Order dated March 22, 1999 reinstating the case was not assailed by petitioners within the reglementary period, despite receipt thereof on March 26, 1999.[25]

On November 19, 1999, Atty. Petalcorin complied with the directive of the trial court to submit the names and addresses of the heirs of Bertuldo.[26]

On November 24, 1999, petitioners filed before us the present petition for certiorari and prohibition.[27] They allege that the public respondent committed grave abuse of discretion in allowing the case to be reinstated after private respondents paid the docket fee deficiency since the trial court had earlier expunged the complaint from the record and nullified all proceedings of the case and such ruling was not contested by the private respondents.   Moreover, they argue that the public respondent committed grave abuse of discretion in allowing the case to be filed and denying the manifestation with motion to dismiss, despite the defect in the complaint which prayed for damages without specifying the amounts, in violation of SC Circular No. 7, dated March 24, 1988.

In their Comment, private respondents aver that no grave abuse of discretion was committed by the trial court in reinstating the complaint upon the payment of deficiency docket fees because petitioners did not object thereto within the reglementary period.  Besides, Atty. Petalcorin possessed no legal personality to appear as counsel for the heirs of Bertuldo until he complies with Section 16, Rule 3 of the Rules of Court.[28]

At the outset, we note the procedural error committed by petitioners in directly filing the instant petition before this Court for it violates the established policy of strict observance of the judicial hierarchy of courts.

Although the Supreme Court, Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum.[29] As we stated in People vs. Cuaresma:[30]

This Court's original jurisdiction to issue writs of certiorari is not exclusive.  It is shared by this Court with Regional Trial Courts and with the Court of Appeals.  This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed.  There is after all a hierarchy of courts.  That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs.  A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level (“inferior”) courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals.  A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition.  This is [an] established policy.  It is a policy necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket.[31]

The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.[32]

Thus, this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.  Exceptional and compelling circumstances were held present in the following cases: (a) Chavez vs. Romulo [33] on citizens’ right to bear arms; (b) Government of the United States of America vs. Purganan [34] on bail in extradition proceedings; (c) Commission on Elections vs. Quijano-Padilla [35] on government contract involving modernization and computerization of voters’ registration list; (d) Buklod ng Kawaning EIIB vs. Zamora [36] on status and existence of a public office; and (e) Fortich vs. Corona [37] on the so-called “Win-Win Resolution” of the Office of the President which modified the approval of the conversion to agro-industrial area.

In this case, no special and important reason or exceptional and compelling circumstance analogous to any of the above cases has been adduced by the petitioners so as to justify direct recourse to this Court.  The present petition should have been initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the dismissal of the petition at bar.

In any event, even if the Court disregards such procedural flaw, the petitioners’ contentions on the substantive aspect of the case fail to invite judgment in their favor.

The unavailability of the writ of certiorari and prohibition in this case is borne out of the fact that petitioners principally assail the Order dated March 22, 1999 which they never sought reconsideration of, in due time, despite receipt thereof on March 26, 1999.  Instead, petitioners went through the motion of filing a supplemental pleading and only when the latter was denied,

32

or after more than three months have passed, did they raise the issue that the complaint should not have been reinstated in the first place because the trial court had no jurisdiction to do so, having already ruled that the complaint shall be expunged.

After recognizing the jurisdiction of the trial court by seeking affirmative relief in their motion to serve supplemental pleading upon private respondents, petitioners are effectively barred by estoppel from challenging the trial court’s jurisdiction.[38] If a party invokes the jurisdiction of a court, he cannot thereafter challenge the court’s jurisdiction in the same case.[39] To rule otherwise would amount to speculating on the fortune of litigation, which is against the policy of the Court.[40]

Nevertheless, there is a need to correct the erroneous impression of the trial court as well as the private respondents that petitioners are barred from assailing the Order dated March 22, 1999 which reinstated the case because it was not objected to within the reglementary period or even thereafter via a motion for reconsideration despite receipt thereof on March 26, 1999.

It must be clarified that the said order is but a resolution on an incidental matter which does not touch on the merits of the case or put an end to the proceedings.[41]  It is an interlocutory order since there leaves something else to be done by the trial court with respect to the merits of the case.[42] As such, it is not subject to a reglementary period. Reglementary period refers to the period set by the rules for appeal or further review of a final judgment or order, i.e., one that ends the litigation in the trial court.

Moreover, the remedy against an interlocutory order is generally not to resort forthwith to certiorari, but to continue with the case in due course and, when an unfavorable verdict is handed down, to take an appeal in the manner authorized by law.[43]  Only when the court issued such order without or in excess of jurisdiction or with grave abuse of discretion and when the assailed interlocutory order is patently erroneous and the remedy of appeal would not afford adequate and expeditious relief will certiorari be considered an appropriate remedy to assail an interlocutory order.[44] Such special circumstances are absolutely wanting in the present case.

Time and again, the Court has held that the Manchester rule has been modified in Sun Insurance Office, Ltd. (SIOL) vs. Asuncion[45] which defined the following guidelines involving the payment of docket fees:

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 fees 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.

3.  Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment.  It shall be the

responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment.[46] Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government, the Manchester rule does not apply.[47]

Under the peculiar circumstances of this case, the reinstatement of the complaint was just and proper considering that the cause of action of private respondents, being a real action, prescribes in thirty years,[48] and private respondents did not really intend to evade the payment of the prescribed docket fee but simply contend that they could not be faulted for inadequate assessment because the clerk of court made no notice of demand or reassessment.[49] They were in good faith and simply relied on the assessment of the clerk of court.

Furthermore, the fact that private respondents prayed for payment of damages “in amounts justified by the evidence” does not call for the dismissal of the complaint for violation of SC Circular No. 7, dated March 24, 1988 which required that all complaints must specify the amount of damages sought not only in the body of the pleadings but also in the prayer in order to be accepted and admitted for filing.  Sun Insurance effectively modified SC Circular No. 7 by providing that filing fees for damages and awards that cannot be estimated constitute liens on the awards finally granted by the trial court.[50]

Thus, while the docket fees were based only on the real property valuation, the trial court acquired jurisdiction over the action, and judgment awards which were left for determination by the court or as may be proven during trial would still be subject to additional filing fees which shall constitute a lien on the judgment.  It would then be the responsibility of the Clerk of Court of the trial court or his duly authorized deputy to enforce said lien and assess and collect the additional fees.[51] 

It is worth noting that when Bertuldo filed his Answer on July 2, 1991, he did not raise the issue of lack of jurisdiction for non-payment of correct docket fees. Instead, he based his defense on a claim of ownership and participated in the proceedings before the trial court.  It was only in September 22, 1998 or more than seven years after filing the answer, and under the auspices of a new counsel, that the issue of jurisdiction was raised for the first time in the motion to expunge by Bertuldo’s heirs.

After Bertuldo vigorously participated in all stages of the case before the trial court and even invoked the trial court’s authority in order to ask for affirmative relief, petitioners, considering that they merely stepped into the shoes of their predecessor, are effectively barred by estoppel from challenging the trial court’s jurisdiction. Although the issue of jurisdiction may be raised at any stage of the proceedings as the same is conferred by law, it is nonetheless settled that a party may be barred from raising it on ground of laches or estoppel.[52]

Moreover, no formal substitution of the parties was effected within thirty days from date of death of Bertuldo, as required by Section 16, Rule 3[53] of the Rules of Court.  Needless to stress, the purpose behind the rule on substitution is the protection of the right of every party to due process.  It is to ensure that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of his estate.[54] Non-compliance with the

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rule on substitution would render the proceedings and judgment of the trial court infirm because the court acquires no jurisdiction over the persons of the legal representatives or of the heirs on whom the trial and the judgment would be binding.[55] Thus, proper substitution of heirs must be effected for the trial court to acquire jurisdiction over their persons and to obviate any future claim by any heir that he was not apprised of the litigation against Bertuldo or that he did not authorize Atty. Petalcorin to represent him.

The list of names and addresses of the heirs was submitted sixteen months after the death of Bertuldo and only when the trial court directed Atty. Petalcorin to comply with the provisions of Section 16, Rule 3 of the Rules of Court.  Strictly speaking therefore, before said compliance, Atty. Petalcorin had no standing in the court a quo when he filed his pleadings.  Be that as it may, the matter has been duly corrected by the Order of the trial court dated October 15, 1999.

To be sure, certiorari under Rule 65[56] is a remedy narrow in scope and inflexible in character.  It is not a general utility tool in the legal workshop.[57] It offers only a limited form of review. Its principal function is to keep an inferior tribunal within its jurisdiction.[58] It can be invoked only for an error of jurisdiction, that is, one where the act complained of was issued by the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of jurisdiction,[59] not to be used for any other purpose,[60] such as to cure errors in proceedings or to correct erroneous conclusions of law or fact.[61] A contrary rule would lead to confusion, and seriously hamper the administration of justice.

Petitioners utterly failed to show that the trial court gravely abused its discretion in issuing the assailed resolutions. On the contrary, it acted prudently, in accordance with law and jurisprudence.

WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit.

No costs.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., Tinga and Chico-Nazario, JJ., concur.

34

THIRDD I V I S I O N

G.R. No. 136325. July 29, 2005

MANUEL M. SERRANO, Petitioner, vs. EUGENIO C. DELICA, Respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

At bar is a petition for review on certiorari [1] assailing the Decision [2] dated September 30, 1998 and Resolution dated November 13, 1998 of the Court of Appeals in CA-G.R. SP No. 46632, entitled 'Manuel M. Serrano, petitioner, vs. Hon. Alberto L. Lerma, Presiding Judge, Regional Trial Court, Branch 256, Muntinlupa City, and Eugenio C. Delica, respondents.

The petition stemmed from the following facts:

On June 30, 1997, Eugenio C. Delica, respondent, filed with the Regional Trial Court, Branch 256, Muntinlupa City, presided by Judge Alberto L. Lerma, a complaint for cancellation of Deeds of Sale, Transfer Certificates of Title, Joint Venture Agreement, and damages, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order, docketed as Civil Case No. 97-120. Impleaded as defendants were Manuel M. Serrano, now petitioner, Manuel P. Blanco, MBJ Land, Inc., and MARILAQUE Land, Inc.

The complaint alleges inter alia that respondent is the registered owner of ten parcels of land situated in Bagbagan, Muntinlupa City, with a total area of 2,062,475 square meters, more or less, covered by ten Transfer Certificates of Title (TCT) Nos. S-12619 to S-12628 of the Registry of Deeds, same city. On August 10, 1995, after having been 'promised with financial bonanza by petitioner and Manuel Blanco, respondent executed in favor of the latter a special power of attorney. Blanco then sold to MBJ Land, Inc. respondent's three parcels of land covered by TCT Nos. S-12625, S-12626 and S-12628. Thus, these titles were cancelled and in lieu thereof, TCT Nos. 207282, 207283 and 207284 were issued in the name of MBJ Land, Inc.

On December 4, 1996, MBJ Land, Inc. entered into a Joint Venture Agreement with MARILAQUE Land, Inc. involving the three parcels of land.

On December 23, 1996, petitioner Serrano again 'unduly influenced, coerced and intimidated respondent into executing an affidavit wherein he confirmed that he sold his remaining seven parcels of land, covered by TCT Nos. S-12619 to S-126124 and S-12627, to petitioners. Later, respondent found that these seven titles were cancelled and new titles (TCT Nos. 209636 to 209642) were issued in petitioner's name based on a spurious Deed of Absolute Sale.

Respondent thus prayed in his complaint that the special power of attorney, affidavit, the new titles issued in the names of petitioner and MBJ Land, Inc., and contracts of sale be cancelled; and that petitioner and his co-defendants be ordered to pay respondent, 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. Respondent likewise prayed that, pending trial on the merits, a temporary restraining order and a writ of preliminary injunction be issued ordering the defendants 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.

Petitioner then filed his answer with compulsory counterclaim, denying the material allegations of the complaint.

Respondent later amended his complaint.

On August 5, 1997, the trial court issued a temporary restraining order and on September 8, 1997, a preliminary injunction directing petitioner and his co-defendants to immediately restore respondent to his possession.

Petitioner then filed consolidated motions for reconsideration praying that the complaint be dismissed for respondent's failure to pay the required docket fee; and that Judge Lerma be directed to inhibit himself from hearing the case.

The trial court, in its Order dated January 7, 1998, denied petitioner's consolidated motions.

Petitioner seasonably filed with the Court of Appeals a petition for certiorari and prohibition with application for a preliminary injunction and temporary restraining order assailing the trial court's twin Orders dated September 8, 1997 ordering the issuance of a writ of preliminary injunction; and denying his consolidated motions dated January 7, 1998. Petitioner raised three issues: (a) whether respondent paid the correct docket fee; (b) whether the trial court's issuance of the writ of preliminary injunction is in order; and (c) whether Judge Lerma should inhibit himself from hearing the case.

On September 30, 1998, the Court of Appeals rendered a Decision partially granting the petition by: (1) affirming the trial court's ruling that the docket fee was correctly paid; (2) setting aside the trial court's Order directing the issuance of a writ of preliminary injunction; and (3) leaving the matter of inhibition to the discretion of Judge Lerma.

Petitioner then filed a motion for partial reconsideration of the Court of Appeals' ruling that respondent correctly paid the docket fee and that the motion for inhibition should be addressed to Judge Lerma's sound discretion.

In a Resolution dated November 13, 1998, the Appellate Court denied the motion.

Hence the instant petition for review on certiorari.

The core issues for our resolution are:

1. Whether respondent paid the correct docket fee when he filed his complaint in Civil Case No. 97-120; and

2. Whether the matter of inhibition should be addressed to Judge Lerma's discretion.

35

On the first issue, we cannot overemphasized the importance of paying the correct docket fees. Such fees are intended to take care of court expenses in the handling of cases in terms of cost of supplies, use of equipment, salaries and fringe benefits of personnel, etc., computed as to man-hours used in the handling of each case. The payment of said fees, therefore, cannot be made dependent on the result of the action taken, without entailing tremendous losses to the government and to the judiciary in particular. [3]

Thus, the rule is that 'upon the filing of the pleading or other application which initiates an action or proceeding, the fees prescribed therefor shall be paid in full. [4] However, a litigant who is a pauper is exempt from the payment of the docket fees. But the fees shall be a lien on the judgment rendered in favor of said pauper litigant, unless the court otherwise provides. [5]

It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fees that vests a trial court with jurisdiction over the subject matter or nature of the action. [6]

In the case at bar, petitioner impugns the Court of Appeals' ruling that respondent's complaint in Civil Case No. 97-120 is not capable of pecuniary estimation and that, therefore, the docket fee is fixed at P600.00 pursuant to Section 7(b)(1), Rule 141 of the Revised Rules of Court.

We agree with petitioner that the Court of Appeals erred in issuing such ruling. It should have considered the allegations of the complaint and the character of the reliefs sought, the criteria in determining the nature of an action. [7]

A careful examination of respondent's complaint is that it is a real action. 'In Paderanga vs. Buissan, [8] 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, [9] 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. [10]

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. [11] 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.

Since the complaint is dismissible, the second issue on whether Judge Lerma should inhibit himself from hearing the case has become moot and academic.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 46632 are hereby REVERSED. The complaint in Civil Case No. 97-120 is ordered DISMISSED without prejudice.

SO ORDERED.

Panganiban, (Chairman), Carpio-Morales, and Garcia, JJ., concur.

Corona, J., on official leave.

36

THIRD DIVISION

 

G.R. No. 89070 May 18, 1992

BENGUET ELECTRlC COOPERATIVE, INC., Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER COSALAN and BOARD OF DIRECTORS OF BENGUET ELECTRIC

COOPERATIVE, INC., * Respondents.

FELICIANO, J.: chanrobles virtual law library

Private respondent Peter Cosalan was the General Manager of Petitioner Benguet Electric Cooperative, Inc. ("Beneco"), having been elected as such by the Board of Directors of Beneco, with the approval of the National Electrification Administrator, Mr. Pedro Dumol, effective 16 October 1982.chanroblesvirtualawlibrary chanrobles virtual law library

On 3 November 1982, respondent Cosalan received Audit Memorandum No. 1 issued by the Commission on Audit ("COA"). This Memorandum noted that cash advances received by officers and employees of petitioner Beneco in the amount of P129,618.48 had been virtually written off in the books of Beneco. In the Audit Memorandum, the COA directed petitioner Beneco to secure the approval of the National Electrification Administration ("NEA") before writing off or condoning those cash advances, and recommended the adoption of remedial measures.chanroblesvirtualawlibrary chanrobles virtual law library

On 12 November 1982, COA issued another Memorandum - Audit Memorandum No. 2 �� addressed to respondent Peter Cosalan, inviting attention to the fact that the audit of per diems and allowances received by officials and members of the Board of Directors of Beneco showed substantial inconsistencies with the directives of the NEA. The Audit Memorandum once again directed the taking of immediate action in conformity with existing NEA regulations.chanroblesvirtualawlibrary chanrobles virtual law library

On 19 May 1983, petitioner Beneco received the COA Audit Report on the financial status and operations of Beneco for the eight (8) month period ended 30 September 1982. This Audit Report noted and enumerated irregularities in the utilization of funds amounting to P37 Million released by NEA to Beneco, and recommended that appropriate remedial action be taken.chanroblesvirtualawlibrary chanrobles virtual law library

Having been made aware of the serious financial condition of Beneco and what appeared to be mismanagement, respondent Cosalan initiated implementation of the remedial measures recommended by the COA. The respondent members of the Board of Beneco reacted by adopting a series of resolutions during the period from 23 June to 24 July 1984. These Board Resolutions abolished the housing allowance of respondent Cosalan; reduced his salary and his representation and commutable allowances; directed him to hold in abeyance all pending personnel disciplinary actions; and struck his name out as a principal signatory to transactions of petitioner Beneco.chanroblesvirtualawlibrary chanrobles virtual law library

During the period from 28 July to 25 September 1984, the respondent Beneco Board members adopted another series of resolutions which resulted in the ouster of respondent Cosalan as General Manager of Beneco and his exclusion from performance of his regular duties as such, as well as the withholding of his salary and allowances. These resolutions were as follows:

1. Resolution No. 91-4 dated 28 July 1984:

. . . that the services of Peter M. Cosalan as General Manager of BENECO is terminated upon approval of the National Electrification Administration;

2. Resolution No. 151-84 dated September 15, 1984;

. . . that Peter M. Cosalan is hereby suspended from his position as General Manager of the Benguet Electric Cooperative, Inc. (BENECO) effective as of the start of the office hours on September 24, 1984, until a final decision has been reached by the NEA on his dismissal; chanrobles virtual law library

. . . that GM Cosalan's suspension from office shall remain in full force and effect until such suspension is sooner lifted, revoked or rescinded by the Board of Directors; that all monies due him are withheld until cleared;

3. Resolution No. 176-84 dated September 25, 1984;

. . . that Resolution No. 151-84, dated September 15, 1984 stands as preventive suspension for GM Peter M. Cosalan. 1

Respondent Cosalan nevertheless continued to work as General Manager of Beneco, in the belief that he could be suspended or removed only by duly authorized officials of NEA, in accordance with provisions of P.D. No, 269, as amended by P.D. No. 1645 (the statute creating the NEA, providing for its capitalization, powers and functions and organization), the loan agreement between NEA and petitioner Beneco 2 and the NEA Memorandum of 2 July 1980. 3 Accordingly, on 5 October and 10 November 1984, respondent Cosalan requested petitioner Beneco to release the compensation due him. Beneco, acting through respondent Board members, denied the written request of respondent Cosalan.chanroblesvirtualawlibrary chanrobles virtual law library

Respondent Cosalan then filed a complaint with the National Labor Relations Commission ("NLRC") on 5 December 1984 against respondent members of the Beneco Board, challenging the legality of the Board resolutions which ordered his suspension and termination from the service and demanding payment of his salaries and allowances. On 18 February 1985, Cosalan amended his complaint to implead petitioner Beneco and respondent Board members, the latter in their respective dual capacities as Directors and as private individuals.chanroblesvirtualawlibrary chanrobles virtual law library

In the course of the proceedings before the Labor Arbiter, Cosalan filed a motion for reinstatement which, although opposed by petitioner Beneco, was granted on 23 October 1987 by Labor Arbiter Amado T. Adquilen. Petitioner Beneco complied with the Labor Arbiter's order on 28 October 1987 through Resolution No. 10-90.chanroblesvirtualawlibrary chanrobles virtual law library

37

On 5 April 1988, the Labor Arbiter rendered a decision (a) confirming Cosalan's reinstatement; (b) ordering payment to Cosalan of his backwages and allowances by petitioner Beneco and respondent Board members, jointly and severally, for a period of three (3) years without deduction or qualification, amounting to P344,000.00; and (3) ordering the individual Board members to pay, jointly and severally, to Cosalan moral damages of P50,000.00 plus attorney's fees of ten percent (10%) of the wages and allowances awarded him.chanroblesvirtualawlibrary chanrobles virtual law library

Respondent Board members appealed to the NLRC, and there filed a Memorandum on Appeal. Petitioner Beneco did not appeal, but moved to dismiss the appeal filed by respondent Board members and for execution of judgment. By this time, petitioner Beneco had a new set of directors.chanroblesvirtualawlibrary chanrobles virtual law library

In a decision dated 21 November 1988, public respondent NLRC modified the award rendered by the Labor Arbiter by declaring that petitioner Beneco alone, and not respondent Board members, was liable for respondent Cosalan's backwages and allowances, and by ruling that there was no legal basis for the award of moral damages and attorney's fees made by the Labor Arbiter.chanroblesvirtualawlibrary chanrobles virtual law library

Beneco, through its new set of directors, moved for reconsideration of the NLRC decision, but without success.chanroblesvirtualawlibrary chanrobles virtual law library

In the present Petition for Certiorari, Beneco's principal contentions are two-fold: first, that the NLRC had acted with grave abuse of discretion in accepting and giving due course to respondent Board members' appeal although such appeal had been filed out of time; and second, that the NLRC had acted with grave abuse of discretion amounting to lack of jurisdiction in holding petitioner alone liable for payment of the backwages and allowances due to Cosalan and releasing respondent Board members from liability therefor.chanroblesvirtualawlibrary chanrobles virtual law library

We consider that petitioner's first contention is meritorious. There is no dispute about the fact that the respondent Beneco Board members received the decision of the labor Arbiter on 21 April 1988. Accordingly, and because 1 May 1988 was a legal holiday, they had only up to 2 May 1988 within which to perfect their appeal by filing their memorandum on appeal. It is also not disputed that the respondent Board members' memorandum on appeal was posted by registered mail on 3 May 1988 and received by the NLRC the following day. 4 Clearly, the memorandum on appeal was filed out of time.chanroblesvirtualawlibrary chanrobles virtual law library

Respondent Board members, however, insist that their Memorandum on Appeal was filed on time because it was delivered for mailing on 1 May 1988 to the Garcia Communications Company, a licensed private letter carrier. The Board members in effect contend that the date of delivery to Garcia Communications was the date of filing of their appeal memorandum.chanroblesvirtualawlibrary chanrobles virtual law library

Respondent Board member's contention runs counter to the established rule that transmission through a private carrier or letter-forwarder �� instead of the Philippine Post Office �� is not a recognized mode of filing pleadings. 5 The established rule is that the date of delivery of pleadings to a private letter-forwarding agency is not to be considered as the date of filing thereof in court, and that in such cases, the date of actual receipt by the court, and not the date of delivery to the private carrier, is deemed the date of filing of that pleading. 6 chanrobles virtual law library

There, was, therefore, no reason grounded upon substantial justice and the prevention of serious miscarriage of justice that might have justified the NLRC in disregarding the ten-day reglementary period for perfection of an appeal by the respondent Board members. Accordingly, the applicable rule was that the ten-day reglementary period to perfect an appeal is mandatory and jurisdictional in nature, that failure to file an appeal within the reglementary period renders the assailed decision final and executory and no longer subject to review. 7 The respondent Board members had thus lost their right to appeal from the decision of the Labor Arbiter and the NLRC should have forthwith dismissed their appeal memorandum.chanroblesvirtualawlibrary chanrobles virtual law library

There is another and more compelling reason why the respondent Board members' appeal should have been dismissed forthwith: that appeal was quite bereft of merit. Both the Labor Arbiter and the NLRC had found that the indefinite suspension and termination of services imposed by the respondent Board members upon petitioner Cosalan was illegal. That illegality flowed, firstly, from the fact that the suspension of Cosalan was continued long after expiration of the period of thirty (30) days, which is the maximum period of preventive suspension that could be lawfully imposed under Section 4, Rule XIV of the Omnibus Rules Implementing the Labor Code. Secondly, Cosalan had been deprived of procedural due process by the respondent Board members. He was never informed of the charges raised against him and was given no opportunity to meet those charges and present his side of whatever dispute existed; he was kept totally in the dark as to the reason or reasons why he had been suspended and effectively dismissed from the service of Beneco Thirdly, respondent Board members failed to adduce any cause which could reasonably be regarded as lawful cause for the suspension and dismissal of respondent Cosalan from his position as General Manager of Beneco. Cosalan was, in other words, denied due process both procedural and substantive. Fourthly, respondent Board members failed to obtain the prior approval of the NEA of their suspension now dismissal of Cosalan, which prior approval was required, inter alia, under the subsisting loan agreement between the NEA and Beneco. The requisite NEA approval was subsequently sought by the respondent Board members; no NEA approval was granted.chanroblesvirtualawlibrary chanrobles virtual law library

In reversing the decision of the Labor Arbiter declaring petitioner Beneco and respondent Board members solidarily liable for the salary, allowances, damages and attorney's fees awarded to respondent Cosalan, the NLRC said:

. . . A perusal of the records show that the members of the Board never acted in their individual capacities. They were acting as a Board passing resolutions affecting their general manager. If these resolutions and resultant acts transgressed the law, to then BENECO for which the Board was acting in behalf should bear responsibility. The records do not disclose that the individual Board members were motivated by malice or bad faith, rather, it reveals an intramural power play gone awry and misapprehension of its own rules and regulations. For this reason, the decision holding the individual board members jointly and severally liable with BENECO for Cosalan's backwages is untenable. The same goes for the award of damages which does not have the proverbial leg to stand on.chanroblesvirtualawlibrary chanrobles virtual law library

The Labor Arbiter below should have heeded his own observation in his decision -

Respondent BENECO as an artificial person could not have, by itself, done anything to prevent it. But because the former have acted while in office and in the course of their official functions as directors of BENECO, . . .

38

Thus, the decision of the Labor Arbiter should be modified conformably with all the foregoing holding BENECO solely liable for backwages and releasing the appellant board members from any individual liabilities. 8 (Emphasis supplied)

The applicable general rule is clear enough. The Board members and officers of a corporation who purport to act for and in behalf of the corporation, keep within the lawful scope of their authority in so acting, and act in good faith, do not become liable, whether civilly or otherwise, for the consequences of their acts, Those acts, when they are such a nature and are done under such circumstances, are properly attributed to the corporation alone and no personal liability is incurred by such officers and Board members. 9 chanrobles virtual law library

The major difficulty with the conclusion reached by the NLRC is that the NLRC clearly overlooked or disregarded the circumstances under which respondent Board members had in fact acted in the instant case. As noted earlier, the respondent Board members responded to the efforts of Cosalan to take seriously and implement the Audit Memoranda issued by the COA explicitly addressed to the petitioner Beneco, first by stripping Cosalan of the privileges and perquisites attached to his position as General Manager, then by suspending indefinitely and finally dismissing Cosalan from such position. As also noted earlier, respondent Board members offered no suggestion at all of any just or lawful cause that could sustain the suspension and dismissal of Cosalan. They obviously wanted to get rid of Cosalan and so acted, in the words of the NLRC itself, "with indecent haste" in removing him from his position and denying him substantive and procedural due process. Thus, the record showed strong indications that respondent Board members had illegally suspended and dismissed Cosalan precisely because he was trying to remedy the financial irregularities and violations of NEA regulations which the COA had brought to the attention of Beneco. The conclusion reached by the NLRC that "the records do not disclose that the individual Board members were motivated by malice or bad faith" flew in the face of the evidence of record. At the very least, a strong presumption had arisen, which it was incumbent upon respondent Board members to disprove, that they had acted in reprisal against respondent Cosalan and in an effort to suppress knowledge about and remedial measures against the financial irregularities the COA Audits had unearthed. That burden respondent Board members did not discharge.chanroblesvirtualawlibrary chanrobles virtual law library

The Solicitor General has urged that respondent Board members may be held liable for damages under the foregoing circumstance under Section 31 of the Corporation Code which reads as follows:

Sec. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be jointly liable and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons . . . (Emphasis supplied)

We agree with the Solicitor General, firstly, that Section 31 of the Corporation Code is applicable in respect of Beneco and other electric cooperatives similarly situated. Section 4 of the Corporation Code renders the provisions of that Code applicable in a supplementary manner to all corporations, including those with special or individual charters so long as those provisions are not inconsistent with such charters. We find no provision in P.D. No. 269, as amended, that would exclude expressly or by necessary implication the applicability of Section 31 of the Corporation Code in respect of members of the boards of directors of electric cooperatives. Indeed, P.D. No. 269 expressly describes these cooperatives as "corporations:"

Sec. 15. Organization and Purpose. - Cooperative non-stock, non-profit membership corporations may be organized, and electric cooperative corporations heretofore formed or registered under the Philippine non-Agricultural Co-operative Act may as hereinafter provided be converted, under this Decree for the purpose of supplying, and of promoting and encouraging-the fullest use of, service on an area coverage basis at the lowest cost consistent with sound economy and the prudent management of the business of such corporations. 10 (Emphasis supplied)

We agree with the Solicitor General, secondly, that respondent Board members were guilty of "gross negligence or bad faith in directing the affairs of the corporation" in enacting the series of resolutions noted earlier indefinitely suspending and dismissing respondent Cosalan from the position of General Manager of Beneco. Respondent Board members, in doing so, acted belong the scope of their authority as such Board members. The dismissal of an officer or employee in bad faith, without lawful cause and without procedural due process, is an act that is contra legem. It cannot be supposed that members of boards of directors derive any authority to violate the express mandates of law or the clear legal rights of their officers and employees by simply purporting to act for the corporation they control.chanroblesvirtualawlibrary chanrobles virtual law library

We believe and so hold, further, that not only are Beneco and respondent Board members properly held solidarily liable for the awards made by the Labor Arbiter, but also that petitioner Beneco which was controlled by and which could act only through respondent Board members, has a right to be reimbursed for any amounts that Beneco may be compelled to pay to respondent Cosalan. Such right of reimbursement is essential if the innocent members of Beneco are not to be penalized for the acts of respondent Board members which were both done in bad faith and ultra vires. The liability-generating acts here are the personal and individual acts of respondent Board members, and are not properly attributed to Beneco itself.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the Petition for Certiorari is GIVEN DUE COURSE, the comment filed by respondent Board members is TREATED as their answer, and the decision of the National Labor Relations Commission dated 21 November 1988 in NLRC Case No. RAB-1-0313-84 is hereby SET ASIDE and the decision dated 5 April 1988 of Labor Arbiter Amado T. Adquilen hereby REINSTATED in toto. In addition, respondent Board members are hereby ORDERED to reimburse petitioner Beneco any amounts that it may be compelled to pay to respondent Cosalan by virtue of the decision of Labor Arbiter Amado T. Adquilen. No pronouncement as to costs.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Gutierrez, Jr., Bidin, Davide, Jr. and Romero, JJ., concur.

39

FIRST DIVISION

[G.R. No. L-27331 : July 30, 1981.]

ELISEO ALIMPOOS, CIRIACA ALIMPOOS, SGT. MILLARDO M. PATES, PEDRO BACLAY, CATALINO YAMILO, RAFAEL CAPANGPANGAN, DALMACIO YGOT and EUFROCINA

ESTORES, Petitioners, vs. THE HONORABLE COURT OF APPEALS, HONORABLE JUDGE MONTANO A. ORTIZ, REYNALDO MOSQUITO and MATILDE ABASTILLAS MOSQUITO,

Respondents.

 

D E C I S I O N

 

MELENCIO-HERRERA, J.:

 

Petitioner-spouses, Eliseo Alimpoos and Ciriaca Alimpoos, shall hereinafter be called the Offended Parties. Petitioners Pedro Baclay, Catalino Yamilo, Rafael Capangpangan, Dalmacio Ygot, Eufrocina Estores and Sgt. Millardo M. Pates may hereinafter be referred to as the Witnesses.

Respondent Reynaldo Mosquito will hereinafter be called the Accused. Respondent Matilde A. Mosquito is the Accused’s wife. Respondent Court of Appeals will be termed the Appellate Tribunal; respondent Judge Montano A. Ortiz, as respondent Trial Judge, and the Municipal Judge, as such.

In this Petition for Certiorari, the Offended Parties and the Witnesses seek the reversal of the Decision of the Appellate Tribunal, upholding the disallowance of the Offended Parties’ appeal by the Court of First Instance of Agusan cranad(the Trial Court, for short) in Civil Case No. 1088, entitled “Reynaldo Mosquito, et al. vs. Eliseo Alimpoos, et al,” wherein respondent Trial Judge granted the Accused’s petition for Habeas Corpus and declared his detention illegal. He also enjoined the prosecution of Criminal Case No. 458 of the Municipal Court of Bayugan, Agusan cranad(hereinafter called Criminal Case) where the Accused had been arrested.

The Accused was detained by the Chief of Police of Bayugan, Agusan, by virtue of a Warrant of Arrest issued by the Municipal Judge in the Criminal Case, which was a prosecution for Robbery with Less Serious Physical Injuries. The place allegedly robbed belonged to the Offended Parties. Contending that the Warrant was issued without the observance of the legal requirements for the issuance thereof, the Accused, then detained, and his wife instituted the Habeas Corpus case before the Trial Court. Named as defendants in the original complaint were the Offended parties and the Witnesses cranad(as witnesses for the prosecution) all of whom are residents of Agusan. In an amended complaint, the two arresting policemen, the Chief of Police, and the Municipal Judge were added as co-defendants.

The Complaint of the Accused was premised on the alleged violation of Article 32 cranad(4), cranad(8), cranad(15), cranad(16), cranad(17) and cranad(19) of the Civil Code, and Article 269 of the Revised Penal Code, by defendants therein who were said to have been instrumental in causing the detention and arrest of the Accused. It prayed for the Accused’s release from detention, as well as for the issuance of a Writ of Preliminary Injunction to enjoin the Offended Parties and the Witnesses, and the Municipal Judge and/or their representatives, from proceeding with the Criminal Case. Actual, moral and exemplary damages, attorney’s fees, and costs were also prayed for.

The Offended Parties and the Witnesses, except Sgt. Pates, were represented by the law firm of Seno, Mendoza and Associates, with offices located in Cebu City. They contended that they had nothing to do with the Accused’s detention and arrest. The Municipal Judge, the Chief of Police, and Patrolmen Libres and Galimba, who were represented by the Acting Provincial Fiscal of Butuan City, alleged that the Warrant of Arrest was validly issued. Sgt. Pates was represented by Capt. Igualdad Cunanan, and reiterated substantially the same defense.

After due hearing in the Habeas Corpus case, respondent Trial Judge issued the appealed Order cranad(the ORDER, for short), dated March 26, 1966, declaring the detention of the Accused illegal and granting the Writ of Habeas Corpus as well as the Preliminary Injunction prayed for upon the filing of the required bond. The dispositive portion of the ORDER reads:

“WHEREFORE, judgment is hereby rendered declaring illegal the detention of plaintiff Reynaldo Mosquito by virtue of a warrant of arrest issued without the observance of the fundamental legal requirements prior to the issuance of said Writ. The petition for habeas corpus is therefore granted and it is hereby ordered that said detention prisoner be forthwith released from custody, and set at liberty and that upon the filing of the bond in the amount of P1,000.00 a writ of preliminary injunction issue restraining the Municipal Judge of Bayugan, Agusan, defendant Vicente Galicia and the rest of the defendants, their attorneys, agents or representatives from proceeding with Criminal Case No. 458 entitled ‘The People of the Philippines versus Reynaldo Mosquito et als.’, for the crime of Robbery with Less Serious Physical Injuries, with costs against the defendants in these habeas corpus and preliminary injunction proceedings.

SO ORDERED.” 1

The Acting Provincial Fiscal of Agusan received copy of said ORDER on March 31, 1966, and on April 1, 1966, moved for extension of time within which to appeal, but eventually desisted from doing so.

On April 4, 1966, counsel for the Offended Parties and the Witnesses mailed from Cebu City a Notice of Appeal to the Court of Appeals stating that:

“Undersigned counsel received a copy of the order only today cranad(April 4, 1966) which copy was handed to him by defendant cranad(petitioner) Eliseo Alimpoos.”

The appeal was opposed by the Accused on the ground that it was filed beyond the 48-hour reglementary period within which to perfect an appeal in Habeas Corpus proceedings.

On April 23, 1966, over the Offended Parties’ objections, respondent Trial Judge dismissed their appeal thus:

“The notice of appeal of the Provincial Fiscal or of Atty. Seno for the defendants, having been filed out of time the Order of March 26, 1966 granting the habeas corpus is now final and executory. The urgent ex-parte motion to grant extension to file notice of appeal does not interrupt the running of the period fixed by law for filing an appeal which is forty-eight hours from receipt of the order.” 2

No reconsideration was prayed for by the Provincial Fiscal.

The Offended Parties, however, resorted to a Mandamus proceeding before the Court of Appeals seeking to compel respondent Trial Judge to give due course to said appeal.

On January 11, 1967, the Appellate Tribunal, 3 in CA-G.R. No. 37781-R, denied Mandamus stating in part:

40

“As the records show that copy of the questioned Order was received by counsel on March 30, 1966, the notice of appeal was not filed within the 48-hour limit. Petitioners’ appeal was therefore filed out of time and the judgment has become final.

“In view of the foregoing, this petition is hereby denied. Costs against petitioners.”

Hence, this Petition for Certiorari, filed on March 13, 1967, praying that the Decision of the Appellate Tribunal be set aside and the appeal interposed by the Offended Parties in the Habeas Corpus case be allowed.

We gave due course to the Petition on March 31, 1967, and after the filing of the respective Briefs, the case was considered submitted for decision on April 19, 1968.

The Offended Parties and the Witnesses pose the following Assignments of Error:

“I

The Honorable Court of Appeals erred in finding that ‘counsel,’ however, has not presented a shred of proof to bolster his claim of actual receipt of the order, Annex ‘B’ on April 4, 1966, save of his own self-serving assertions, which cannot prevail over the court record, cranad(Annex 1 of Answer) certified to by the Clerk of Court, bearing the true actual date when the parties and counsel herein received their corresponding copies. The same certified true copy of the order shows that the law office of herein counsel received its copy on March 30, 1966 not on April 4, 1966;

II

The Honorable Court of Appeals erred in holding that ‘respondent Judge was fully justified in relying on its own record to determine the date on which petitioners’ counsel received copy of the order, without any proof thereof, because courts will take judicial notice of its records and of the facts which the same records establish and which are known to judges by reason of their judicial functions.’

III

The Honorable Court of Appeals erred in finding that ‘as the records show that copy of the questioned order was received by counsel on March 30, 1966, the notice of appeal was not filed within the 48-hour limit.’

IV

The Honorable Court of Appeals erred in finding that ‘petitioners’ appeal was, therefore, filed out of time and the judgment has become final.’

V

The Honorable Court of Appeals erred in denying the Motion for Reconsideration without requiring the adverse party to answer the said Motion for Reconsideration.

VI

The Honorable Court of Appeals erred in failing to pass upon the issues raised in the lower court and in the Court of Appeals.”

The technical issue of timeliness of the appeal will first be considered. Counsel for the Offended Parties alleges that he received a copy of the ORDER only on April 4, 1966 from the Offended Party, Eliseo Alimpoos, who handed him the copy in Cebu City. The latter had received it on March 31, 1966. Counsel contends that the reglementary period to appeal can not be reckoned from the latter date because, under the Rules, when a party is represented by counsel, notice should be sent, not to the party, but to his counsel of record. Counsel for the Offended Parties

and the Witnesses further maintains that the period from which to reckon the period of appeal should actually be April 14, 1966 when he actually received, through the mails, his copy of the ORDER, as shown by the rubber stamp of his office appearing on the upper right hand corner of a duplicate copy of the ORDER. 4

Respondent Trial Judge and the Appellate Tribunal alike found the foregoing assertion self-serving and relied instead on the last page of the ORDER, 5 purportedly showing that the law office of counsel for the Offended Parties and the Witnesses received its copy on March 30, 1966 and not on April 4, 1966, hence the disallowance of the appeal by respondent Trial Judge, and its affirmance by the Appellate Court.

The crucial last page is reproduced hereunder exactly as it appears:

“CIVIL CASE NO. 1088

 

ORDER

 

— 5 —

 

and preliminary injunction proceedings.

 

SO ORDERED.

 

Done this 26th day of March, 1966 at the City of Butuan.

 

(SGD.) MONTANO A. ORTIZ

JUDGE

 

MAO-bb.

Recd.

41

31/3/66 cranad(initial)

 

Received:

(Sgd.) Illegible Mun. Judge cranad(Sgd.) Illegible 3/30/66 7:00 evening

3/31/66 cranad(Sgd.) B. Galimba 3/30/00 7:00

 cranad(Sgd.) Eliseo Alimpoos

 

Received copy March 31, 1966 8:00 A.M.

Ciriaco Alimpoos

Pedro Baklay

Catalino Yamilo

Rafael Capangpangan

Dalmacio Ygot

Eufrocina Estores

 

By: cranad(Sgd.) Eliseo Alimpoos

March 31, 1966

(Sgd.) Illegible

 cranad(Sgd.) Illegible

 

For the Chief of Police 3-30-66

TO ATTYS. SENO, MENDOZA,

RUIZ & ASS. & CAPT. CUNANAN

 

BY REG. MAIL #11633 & #11634

 

A certified true copy:

(s) MACARIO C. CONDE

(t) MACARIO C. CONDE

Clerk of Court” 6 cranad(emphasis supplied)

Obviously, copies of the ORDER intended for “Attys. Seno, Mendoza, Ruiz & Ass. & Capt. Cunanan” were sent by registered mail with Receipts Nos. 11633 and 11634. Receipt No. 11633 is the registry number corresponding to the copy for the law office, and Receipt No. 11634 that for Capt. Cunanan. This is borne out by the envelope 7 from the “Office of the Clerk of Court Butuan City” addressed to “Seno, Mendoza, Ruiz and Associates, Cor. Magallanes-D Jakosalem Sts., Aboitiz Bldg., Cebu City” with the following markings:

On the face of the envelope lower left hand corner:

“REGISTERED

CITY OF BUTUAN

PHILIPPINES

 

March 31, 1966

 

Superimposed on it in ink is “No. 11633”

 

On the back of the envelope appears a big diagonal stamp “FOR OFFICIAL USE ONLY” and two post office stamp marks:

 

42

“REGISTERED

CITY OF BUTUAN

PHILIPPINES

 

March 31, 1966

 

“CEBU CITY

 

Received

April 11, 1966

Philippines

Since the registered mail was received in Cebu City only on April 11, 1966, it is not unlikely that the law office and addressee, as alleged by it, received the mail only three days after, or on April 14, 1966.

The notation

“(Sgd.) Illegible

3-30-66”

appearing above the following note:

“To Attys. Seno, Mendoza, Ruiz & Ass. &

Capt. Cunanan by reg. mail #11633 & #11634”

can not refer to personal receipt by the said law office for the obvious reason that its office being at Cebu City, personal service would not have been possible in Agusan.

It is apparent then that both respondent Trial Judge and the Appellate Tribunal committed error in holding that the Offended Parties’ appeal was interposed beyond the reglementary period. Service on the Offended Party, Eliseo Alimpoos, on March 31, 1966 cannot be deemed as notice in law to his counsel. 8 Under the circumstances, therefore, reliance may be placed on the assertion of counsel that the Offended Party, Eliseo Alimpoos, had given him a copy of the ORDER only on April 4, 1966, which must be deemed as the date of notice to said counsel of the ORDER. Counsel lost no time in mailing his Notice of Appeal on the same day, April 4, 1966 from Cebu. 9 Procedurally, the appeal was seasonably filed.

Although the Appellate Tribunal had committed error in its appreciation of the date when the lawyers of the Offended Parties were served notice of the ORDER, we believe it would not be

justifiable to reverse and to direct respondent Trial Judge to allow the Offended Parties to appeal. Instead, we are opting to render a practical judgment.

1. The original and amended complaints filed by the Offended Parties with the Trial Court contained three causes of action, principally for Habeas Corpus and for damages. However, the proceedings were conducted purely as a Habeas Corpus case. The original complaint was filed on February 22, 1966, and resolved on March 26, 1966, in keeping with the “speedy and effectual” character of Habeas Corpus proceedings. 10

The ORDER treated the case as exclusively a Habeas Corpus proceeding, ignoring the Accused’s prayer for damages. The lawyers of the Offended Parties attempted to appeal from the ORDER in accordance with Section 19 of Rule 41, captioned “who may appeal in Habeas Corpus cases.” The Appellate Tribunal resolved in the mandamus case as relating to a Habeas Corpus case.

2. Because the proceedings before the trial Court was a Habeas Corpus case, the complaint filed was obviously defective. A Habeas Corpus proceeding is not a suit between parties.

“Not a suit between the parties. — While the issuance of the writ is to all intents and purposes the commencement of a civil action, a suit, yet technically the proceedings by Habeas Corpus is in no sense a suit between private parties. It is an inquisition by the government, at the suggestion and instance of an individual, most probably, but still in the name and capacity of the sovereign. It may be analogized to a proceeding in rem and instituted for the sole purpose of fixing the status of a person. The person restrained is the central figure in the transaction. The proceeding is instituted solely for his benefit. As it is not designed to obtain redress against anybody, and as no judgment can be entered against anybody, and as there is no real plaintiff and defendant, there can be no suit in the technical sense.” chanroblesvirtualawlibrary(Extraordinary Legal Remedies, Forrest G. Ferris & Forrest G. Ferris, Jr., p. 28)

The Accused, therefore, should have limited his complaint against the Chief of Police of Bayugan, the person having him in alleged illegal custody. That is the clear implication in the following provisions of Section 3, Rule 102, which enumerates what should be set forth in a petition for Habeas Corpus:

“SEC. 3. Requisites of application therefor. — Application for the writ shall be by petition signed and verified either by the party for whose relief it is intended, or by some person on his behalf, and shall set forth:

(a) That the person in whose behalf the application is made is imprisoned or restrained of his liberty;

(b) The officer or name of the person by whom he is so imprisoned or restrained; or, if both are unknown or uncertain, such officer or person may be described by an assumed appellation, and the person who is served with the writ shall be deemed the person intended;

(c) The place where he is so imprisoned or restrained, if known;

(d) A copy of the commitment or cause of detention of such person, if it can be procured without impairing the efficiency of the remedy; or, if the imprisonment or restraint is without any legal authority, such fact shall appear.”

The Accused’s allegation as to, and prayer for, damages was out of place. In Habeas Corpus cases, the judgment in favor of the applicant cannot contain a provision for damages. It has to be confined to what is provided for in Section 15, Rule 102, which reads:

43

“SEC. 15. When prisoner discharged if no appeal. — When the court or Judge has examined into the cause of caption and restraint of the prisoner, and is satisfied that he is unlawfully imprisoned or restrained, he shall forthwith order his discharge from confinement, but such discharge shall not be effective until a copy of the order has been served on the officer or person detaining the prisoner. If the officer or person detaining the prisoner does not desire to appeal, the prisoner shall be forthwith released.”

It will be observed that there is no provision for serving copy of the discharge on any other private party defendant, nor for an award of damages.

As it has been held:

“The sole function of the writ is to relieve from unlawful imprisonment, and ordinarily it cannot properly be used for any other purpose. Thus it has been held that the writ cannot properly be used: To enforce a right to service; to determine whether a person has committed a crime; in determine a disputed interstate boundary line; to punish respondent or to afford the injured person redress, for the illegal detention; to recover damages or other money award; . cra .”  chanroblesvirtualawlibrary(emphasis supplied) cranad(Vt — In re St. Onge, 108 A203, 93 Vt. 373; NY — People vs. Prior, 182 NYS 577, 112 Misc. 208 [39 C.J.S. 430]).

3. The Accused has challenged the personality of the Offended Parties to interpose the appeal, premised on Section 19 of Rule 41 of the Rules of Court, which provides:

SEC 19. Who may appeal in habeas corpus cases. — The appeal in habeas corpus cases may be taken in the name of the person detained or of the officer or person detaining him. But if the detention is by reason of civil proceedings the party in interest or the person who caused the detention shall be entitled to control the appeal; and if, by virtue of criminal proceedings, the provincial fiscal or the city fiscal as the case may be, is entitled to control the appeal on behalf of the government, subject to the right of the Solicitor General to intervene”  chanroblesvirtualawlibrary(Rule 41).

It is indisputable that the Habeas Corpus case arose by virtue of criminal proceedings in the Criminal case. Pursuant to the aforequoted provision, therefore, it was the Provincial Fiscal who was entitled to control the appeal on behalf of the Government. In this case, although the Provincial Fiscal of Agusan, filed a “Motion for Extension of Time to Perfect Appeal” on April 1, 1966, he had nevertheless abandoned the same. Neither did he take steps for the reconsideration of respondent Trial Judge’s Order of April 23, 1966 dismissing the appeal. The inaction of the Fiscal may be deemed to have been an admission on his part of the unmeritoriousness of an appeal. As in criminal proceedings, his sound discretion on the matter should be deemed controlling, and it has to be held that the Offended Parties were bereft of personality to prosecute the appeal.

Noteworthy is the fact that in the instant case, the Offended Parties had alleged in their Answer 11 that they were not detaining the Accused and had nothing to do with the Warrant of Arrest issued against him. With all the more reason then that they had no personality to interpose an appeal from a judicial Order granting the Writ of Habeas Corpus and ordering the release of a person detained.

4. It has been noted that the ORDER contains a provision enjoining the prosecution of the Accused in the Criminal Case. That is error. If the Accused was illegally detained because he was arrested without a preliminary examination, what should have been done was to set aside the warrant of arrest and order the discharge of the Accused, but without enjoining the Municipal Judge from conducting a preliminary examination and afterwards properly issuing a warrant of arrest. Habeas Corpus proceedings are not meant to determine criminal responsibility. This

principle was enunciated in Lee Ching v. Collector of Customs, 33 Phil. 329 cranad(1916) where it was said:

“Proceedings in habeas corpus are separate and distinct from the main case from which the proceedings spring. They rarely, if ever, touch the merits of the case and require no pronouncement with respect thereto.”

When a preliminary investigation is not held, or is improperly held, the procedure is not to dismiss the case, or enjoin its prosecution, but to have the preliminary investigation conducted. As stated in People v. Figueroa, 27 SCRA, 1239, 1247 cranad(1969):

“Assuming that the trial court felt that the accused should have been given more ‘ample chance and opportunity to be heard in the preliminary investigation,’ then what it could properly have done, since in its own Order it recognized that Fiscal Abaca had conducted a preliminary investigation although ‘hurriedly’ in its opinion, was not to dismiss the information but to hold the case in abeyance and conduct its own investigation or require the fiscal to hold a reinvestigation. This Court, speaking through now Mr. Chief Justice Concepcion in People vs. Casiano, had stressed this as the proper procedure, pointing out that ‘the absence of such investigation did not impair the validity of the information or otherwise render it defective. Much less did it affect the jurisdiction of the Court of First Instance over the present case.’“

5. As a matter of fact, Habeas Corpus was not the proper remedy for the Accused. In a case where a warrant of arrest was assailed for an alleged improper preliminary examination, this Court, in Luna v. Plaza, 26 SCRA, 310, 323 cranad(1968), said:

“At any rate, we believe that, if at all, the remedy available to the petitioner herein, under the circumstances stated in this opinion, is not a petition for a writ of habeas corpus but a petition to quash the warrant of arrest or a petition for reinvestigation of the case by the respondent Municipal Judge or by the Provincial Fiscal.”

It is the general rule that Habeas Corpus should not be resorted to when there is another remedy available.

“As a general rule, a writ of habeas corpus will not be granted where relief may be had or could have been procured by resort to another general remedy, such as appeal or writ of error. But the existence of another remedy does not necessarily preclude a resort to the writ of habeas corpus to obtain relief from illegal detention, especially where the other remedy is deemed not to be as effective as that of habeas corpus.” 12

Time and again, it has been explained that Habeas Corpus cannot function as a writ of error. 13

6. It has further been noted that respondent Trial Judge erred in adjudging “costs” against defendants in the Habeas Corpus case. “When a person confined under color of proceedings in a criminal case is discharged, the costs shall be taxed against the Republic” 14

7. The Accused was charged with Robbery with Less Serious Physical Injuries in early 1966. Through the error of the Municipal Judge in issuing the warrant of arrest without conducting a preliminary examination, the Accused was able to institute the Habeas Corpus case which has pended to this date, or for fifteen years. The error of the Municipal Judge has considerably retarded the turning of the wheels of justice. It should be meet to reiterate the following admonition made in the aforecited Luna-Plaza case:

“We wish to stress, however, that what has been stated in this opinion is certainly not intended to sanction the return to the former practice of municipal judges of simply relying upon affidavits or sworn statements that are made to accompany the complaints that are filed before them, in determining whether there is a probable cause for the issuance of a warrant of arrest. That practice is precisely what is sought

44

to be voided by the amendment of Section 87 cranad(c) of Republic Act 296 cranad(Judiciary Act of 1948) which requires that before a municipal judge issues a warrant of arrest he should first satisfy himself that there is a probable cause by examining the witnesses personally, and that the examination must be under oath and reduced to writing in the form of searching questions and answers. It is obvious that the purpose of this amendment is to prevent the issuance of a warrant of arrest against a person based simply upon affidavits of witnesses who made, and swore to, their statements before a person or persons other than the judge before whom the criminal complaint is filed. We wish to emphasize strict compliance by municipal or city judges of the provision of Section 87(c) of the Judiciary Act of 1948, as amended by Republic Act 3828, in order to avoid malicious and/or unfounded criminal prosecution of persons.”

In view of the foregoing considerations, it should be practical to resolve this case in a manner that will not further protract the matter brought to this instance. It will not do merely to reverse and set aside the appealed decision of the Appellate Tribunal, for it will leave the ORDER of respondent Trial Judge outstanding with its injunction against the further prosecution of the Criminal Case.

WHEREFORE, in the distinct understanding that this Court has not acted in a proper Habeas Corpus proceeding, the Warrant of Arrest issued against Reynaldo Mosquito in Criminal Case No. 458 of the Municipal Court of Bayugan, Agusan, the Order of March 26, 1966 issued in Civil Case No. 1088 of the Court of First Instance of Agusan, as well as the Decision of the Court of Appeals in its case CA-G.R. No. 37781-R, are hereby set aside; and the proceedings in the last two cases mentioned are invalidated.

Without pronouncement as to costs.

SO ORDERED.

Teehankee cranad(Chairman), Makasiar, Fernandez and Guerrero, JJ., concur.

Alimpoos v. CAFacts: Reynaldo Mosquito has been accused of Robbery w/ less Serious Physical Injur ies. Hew a s d e t a i n e d b y v i r t u e o f a w a r r a n t o f a r r e s t which was issued without the observance of thel e g a l r e q u i r e m e n t s f o r t h e i s s u a n c e t h e r e o f . M o s q u i t o f i l e d a p e t i t i o n f o r H a b e a s C o r p u s b e f o r e t h e T r i a l C o u r t . M o s q u i t o n a m e d a s defendants in the case the Prov. Fiscal and theprivate offended parties. he also filed a claim ford a m a g e s p r e m i s e d o n A r t s . 3 2 ( 4 ) a n d o t h e r applicable provisions of the Civil Code.Issues:

 1. WON the writ of Habeas Corpus if the properremedy for Mosquito?2. WON damages may be awarded in a HabeasCorpus case?3. WON private offended party may take part inthe case?Held:1. The WHC is not the proper remedy. When awarrant of arrest is being assailed for improperp r e l i m i n a r y i n v e s t i g a t i o n , t h e r e m e d y i s a petition to quash the warrant of arrest or petitionfor reinvestigation of the case. It is the gen. rulethat a HC shld. not be resorted to when there isanother remedy available.2. No. Damages cannot be awarded. The solef u n c t i o n o f t h e w r i t i s t o r e l i e v e f r . u n l a w f u l i m p r i s o n m e n t a n d o r d i n a r i l y i t c a n n o t b e properly used for another purpose.3. While the issuance of the writ connotes thecommencement of a civil action, the proceedingsfor HC is technical ly not yet a suit bet. pr ivateparties. The proper party is the Chief of Police orthe person having the accused in detention andnot the private offended party. It is also only thef iscal who

may appeal the order grant ing thew r i t a s m a n d a t e d b y S e c . 1 9 R U L E 4 1 o f t h e ROC.

45

SECOND DIVISION

G.R. No. L-58781               July 31, 1987

TEOFILO MAGNO, ISIDRO CABATIC, HERMINIO CABATIC, FELICITAS CABATIC, Assisted by her husband, JOSE CARINO, TOMAS MAGNO, ELPIDIO MAGNO, AURORA MAGNO, Assisted by her husband, ODELON BUGAYONG, NICANOR MAGNO and LOLITA MAGNO, petitioners, vs.HONORABLE COURT OF APPEALS, GAVINO MAGNO, NICETAS MAGNO, and NAZARIA MAGNO, Assisted by her husband, SIMEON DE GUZMAN, respondents.

PARAS, J.:

This is a special civil action for certiorari seeking to declare void ab initio the Resolution of respondent Court of Appeals dated September 22, 1981 which ordered the issuance of an Entry of Judgment in CA-G.R. No. 52655-R. The petition also prays for the issuance of a preliminary injunction to temporarily maintain the status quo by ordering the provincial sheriff of the province of Pangasinan to desist from enforcing the writ of execution issued in Civil Case No. A-413 pursuant to the said Entry of Judgment.

Civil Case No. A-413 is an action for Partition of Certain Properties and for Damages, filed by private respondents against petitioners in the Court of First Instance of Pangasinan, Branch VII thereof. In a Decision* dated October 5, 1972, the lower court ordered the partition of the properties subject of the complaint in accordance with the schedule therein appearing. It also ordered the petitioners to pay jointly and severally unto the private respondents the amount of P3,000.00 as attorney's fees.

Petitioners appealed to the Court of Appeals which appeal was docketed as CA-G.R. No. 52655-R. On June 30, 1981, the said court promulgated its Decision** affirming the decision of the lower court.

Notice of the decision was sent to petitioners' counsel Atty. Atinidoro B. Sison at his given mailing address which is 33 B.M.A. Ave., Tatalon, Quezon City. The same, however, was returned to the court with the certification of the postmaster — "Return to sender, Reason — moved."

On September 14, 1981, respondent Court of Appeals issued the following Resolution: —

Considering that the copy of Decision dated June 30, 1981 addressed to Atty. Atinidoro B. Sison of 33 B.M.A. Tatalon, Quezon City, counsel for the appellants was returned unclaimed with the notation on the envelope "MOVED", the Court Resolved to resend the said copy of the Decision to the appellants themselves at Alaminos, Pangasinan, and the appellants are hereby informed that the fifteen (15) days period within which to file for reconsideration will be counted from the receipt of the decision herewith attached. (Annex "5-A" p. 54, Rollo).

A copy of this Resolution was sent to petitioners themselves addressed as follows — Mr. Teofilo Magno et al., Patricio, Alaminos, Pangasinan. It is not disputed that this address is the address on record of petitioners. But again the enveloped addressed to them was returned to the court with the notation — deceased.

On September 22, 1981, the respondent court issued its now assailed Resolution ordering the issuance of the entry of judgment.

Petitioners' motion for reconsideration was denied hence, they filed the present petition, which We find to be without merit.

It is well-settled that when a party is represented by counsel, notice should be made upon the counsel of record at his given address to which notices of all kinds emanating from the court should be sent in the absence of a proper and adequate notice to the court of a change of address. (Cubar vs. Mendoza, 120 SCRA 768).

In the case now before Us, the records show that the notice and copy of the decision of respondent Court of Appeals were sent to petitioners's counsel of record Atty. Atinidoro E. Sison at his given mailing address which is 33 B.M.A. Avenue, Tatalon, Quezon City. The first notice to him by the Postmaster to claim his mail was on July 9, 1981. The rule is that service of notice becomes effective at the expiration of the five-day period upon failure of the addresse to claim his mail within five (5) days from the date of first notice Sec. 8, Rule 13 Rules of Court (Feraren vs. Santos, 113 SCRA 707). Therefore in this case the service became effective five days after July 9, 1981 which is July 14, 1981. The decision became final on August 13, 1981. A xerox copy of the said envelope properly addressed appears on page 52 of the Rollo. This fact is further shown by the certification issued by the then Acting Clerk of the Court of Appeals, Atty. Cesar M. Marzan. (p. 51, Rollo). If Atty. Sison moved to another address without informing the respondent of his change of address the omission or neglect will not stay the finality of the decision. The notice sent to petitioners themselves, under the circumstances is not even necessary. (Francisco vs. Puno, 108 SCRA 427). It may be stated though that while petitioners claim that Teofilo Magno to whom the notice to the petitioners was addressed is already dead, it is not explained why their present petition before this Court still includes the name Teofilo Magno. There is no indication in the record that he has been duly substituted by his legal representative.

The decision in this case having become final on July 29, 1981, there being no appeal taken therefrom, respondent court committed no error in issuing its resolution dated September 22, 1981 ordering the issuance of the corresponding entry of judgment.

WHEREFORE, for lack of merit, this petition is hereby DISMISSED. The restraining order earlier issued is lifted.

SO ORDERED.

Yap (Chairman), Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

Footnotes

* Penned by Judge Magno B. Pablo.

46

FIRST DIVISION

G.R. No. 86819 November 9, 1989

ADAMSON OZANAM EDUCATIONAL INSTITUTION INC., ALSO KNOWN AS ADAMSON UNIVERSITY, Petitioner, vs. ADAMSON UNIVERSITY FACULTY AND EMPLOYEES

ASSOCIATION AND CONRADO MAGLAYA, COMMISSIONER OF THE NATIONAL LABOR RELATIONS COMMISSION, Respondents.

R E S O L U T I O N

 

GANCAYCO, J.:

The Adamson Ozanam Educational Institution, Inc. also known as the Adamson University (AU) was granted by the then Ministry of Education, Culture & Sports (MECS), the authority to increase their tuition fees by 10% and 5% for the school year 1983-84. The Adamson University Faculty and Employees Association (AUFEA) believing that under P.D. No. 451 60% thereof should be allocated for the increase in salaries and wages of the members of the faculty and other members of the school filed a complaint in the Ministry of Labor & Employment (MOLE) against the AU for the recovery of the said 60%.chanroblesvirtualawlibrary chanrobles virtual law library

The contention of the AU is that P.D. No. 451 was repealed by the Educational Act of 1982, which took effect on September 12, 1982, and that assuming that B.P. No. 451 was not repealed, complainant is not entitled to any benefit considering that there was no actual increment proceeds in the tuition fee increase for the school year 1983-84 upon which to base the 60% allocation.chanroblesvirtualawlibrary chanrobles virtual law library

In a decision of the labor arbiter dated March 31, 1986 the complaint was dismissed for lack of merit. The AUFEA appealed therefrom to the National Labor Relations Commission (NLRC) wherein in due course a decision was rendered on September 30, 1988 setting aside the appealed decision and ordering the AU to remit to the members of AUFEA the amount of P1,298,160.00 representing the 60% share in the increment proceeds of the tuition fees collected for the school year 1983-84. A motion for reconsideration of the said decision filed by the AU was denied in a resolution dated January 30, 1989 for having been filed out of time.chanroblesvirtualawlibrary chanrobles virtual law library

Hence, the herein petition for certiorari filed by the AU. On February 22, 1989, the court dismissed the petition for failure to sufficiently show that respondent commission had committed a grave abuse of discretion in rendering its questioned judgment. A motion for reconsideration hereof was filed by petitioner to which respondents were required to file their comment. The desired comments having been submitted and the reply thereto filed by petitioner, the court finds a cogent basis to grant the motion for reconsideration. The petition is based on the following arguments:

SERVICE OF THE DECISION UPON THE SECURITY GUARD OF THE TOEFEMI BUILDING, WHERE RESPONDENT'S FORMER COUNSEL USED TO HOLD OFFICE, IS INEFFECTIVE AND DOES NOT CAUSE THE RUNNING OF THE 10-DAY PERIOD FOR AN APPEAL.chanroblesvirtualawlibrary chanrobles virtual law library

BASED ON THE MERITS OF THE CASE, THE SUBJECT DECISION PROMULGATED ON 30 SEPTEMBER 1988 IS CONTRARY TO THE DOCTRINE LAID DOWN IN CEBU INSTITUTE OF TECHNOLOGY ET AL. VS. HON. BLAS OPLE, ET AL.

On the first issue, it appears that the decision of the NLRC dated September 30, 1988 was served to the office of the counsel for petitioner on October 11, 1988 through the security guard of the building. The office of then counsel for petitioner, Atty. Andres Narvasa (now member of this Court), was located at the TOEFEMI building. The copy of the decision was addressed to Atty. Roberto I. Santos of said law office. However, at the time of said serllice the said law office was already dissolved as Atty. Narvasa was appointed as a member of this Court. Nevertheless, a copy of said decision was transmitted by the former office of now Mr. Justice Narvasa to the present counsel of record for petitioner on November 5, 1988 who promptly filed a motion for reconsideration on November 15, 1988.chanroblesvirtualawlibrary chanrobles virtual law library

In denying the motion for reconsideration the NLRC observed that the former counsel of petitioner did not withdraw nor file a manifestation that his office had been dissolved so he cannot continue to act as counsel thereof.chanroblesvirtualawlibrary chanrobles virtual law library

Thus the question that arises is whether the service of the copy of the decision upon the security guard of the building where the former office of petitioner's counsel was located was sufficient compliance with the requirements of the law. Section 4, Rule 13 of the Rules of Court which is suppletory to the rules of the NLRC, provides as follows:

Section 4. Personal Service. - Service of the papers may be made by delivering personally a copy to the party or his attorney, or by leaving it in his office with his clerk or with a person having charge thereof. If no person is found in his office, or his office is not known, then by leaving the copy, between the hours of eight in the morning and six in the evening, at the party's or attomey's residence, if known, with a person of sufficient discretion to receive the same. (Emphasis supplied)

Under the foregoing rule, service of papers should be delivered personally to the party or attorney or by leaving it at his office with his clerk or with a person having charge thereof. The service of the court's order upon any person other than the party's counsel is not legally effective. 1 Where the copy of the decision is served on a person who is neither a clerk or one in charge of the attorney's office, such service is invalid and the decision does not therefore become executory. 2 The security guard of the building where the attorney is holding office is neither the office clerk nor a person in charge thereof as contemplated in the rules. In PLDT vs. NLRC, 3 this Court ruled that the service of the decision at the ground floor of a party's building when the office is at the 9th floor is not a valid service.chanroblesvirtualawlibrary chanrobles virtual law library

From the foregoing, it is clear that the service of the decision dated October 11, 1988 on the security guard of the building where the then counsel for petitioner was holding office was an invalid service and the running of the period within which to appeal therefrom or file a motion for

47

reconsideration cannot be deemed to commence thereby.chanroblesvirtualawlibrary chanrobles virtual law library

While it is true that said former counsel of petitioner failed to withdraw his appearance, the NLRC can take judicial notice of the fact that Mr. Justice Narvasa was already elevated to the Supreme Court at the time the decision in this case was promulgated. Since its decisions are reviewable by the Supreme Court such matter of public knowledge should be within the judicial notice of the NLRC because of the nature of their functions. 4 chanrobles virtual law library

On the second issue, the order of respondent NLRC to petitioner to remit to the respondent AUFEA the sum of P1,298,160.00 representing its 60% share in the increment tuition fees collected for the school year 1983-1984 is predicated on the argument that: 1) MECS Order No. 25 took effect on April 1, 1985 and prior thereto this Court has ruled that the 60% incremental proceeds should be applied to the basic salaries and wages; and 2) inasmuch as the CBA was concluded two (2) days after petitioner was granted the authority to increase its tuition fees, it does not necessarily follow that the parties intended that the CBA benefits will be taken from the said incremental proceeds.chanroblesvirtualawlibrary chanrobles virtual law library

We disagree.chanroblesvirtualawlibrary chanrobles virtual law library

In the case of Cebu Institute of Technology vs. Hon. Blas Ople, 5 this Court ruled that P.D. No. 451 was repealed by B.P. 232 effective September 11, 1982. From the said date the governing law on the disposition of the 60% incremental proceeds on the tuition fees are the appropriate provisions of B.P. Blg. 232, which, in pertinent part provides as follows:

Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance, imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions, social security, medicare, unpaid school personnel claims, and payment as may be prescribed by mandated wage orders, collective bargaining agreements and voluntary employer practices ... (Sec. 42; Emphasis supplied)

Accordingly, as of September 11, 1982, Section 3(a) of PD 451 which limits the disposition of said 60% incremental proceeds increase in tuition fees to those of salaries and wages is deemed abrogated by way of repeal. 6 Indeed even prior thereto this Court ruled in the University of the East vs. UE Faculty Association 7 as follows:

We are underscoring such modification because as We see it, it settles the second main issue We have stated at the outset as to whether or not increase of salaries of wages or allowances or benefits secured by collective bargaining may be charged against the incremental proceeds (60%) under PD 451. We read the latest Malacañang decision to mean that increase of salaries even those secured bv collective bargaining may be charged to the 60% incremental proceeds of MEC authorized tuition fee increases. ... (Emphasis supplied)

MECS Order No. 25 finds legal support in B.P. Blg. 232, otherwise known as the Educational Act of 1982 as said MECS Order is an implementing administrative rule interpretative of a pre-existing statute and not declarative of certain rights with obligation thereunder. The same should be given retroactive effect and its effectivity should be on September 11, 1982, which is the date of effectivity of B.P. Blg. 232, not April 1, 1985. Remedial or curative statutes are by nature intended to be retroactive. 8 chanrobles virtual law library

And this is as it should be as rules and regulations are and should be for the sole purpose of carrying into effect a general provision of the law. 9 Thus guided bv the Cebu Institute of Technology which declared the automatic repeal of P.D. 451 respondent NLRC committed a grave error in ruling that petitioner cannot charge to the 60% incremental proceeds the items under paragraph 7.4 of the MECS Order No. 25 including collective bargaining.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the motion for reconsideration is granted and the resolution of February 22, 1989 is set aside; the petition is GRANTED so that the questioned decision of the NLRC dated September 30, 1988 and its resolution dated January 20, 1989 are hereby REVERSED AND SET ASIDE while the decision of the labor arbiter dated March 31, 1986 dismissing the complaint for lack of merit is hereby AFFIRMED without pronouncement as to costs.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Cruz, Griño-Aquino and Medialdea, JJ., concur.chanroblesvirtualawlibrary chanrobles virtual law library

Narvasa, J., took no part.

48

FIRST DIVISION

 

G.R. No. 132007 August 5, 1998

SOLAR TEAM ENTERTAINMENT, INC., petitioner, vs.HON. HELEN BAUTISTA RICA-FORT, in her capacity as Presiding Judge of the Regional Trial Court of Parañaque, Metro Manila (Branch 260), TEAM IMAGE ENTERTAINMENT, INC., FELIX S. CO, JEFFREY C. CAL, and KING CUISIA, respondents.

 

DAVIDE, JR., J.:

At issue is whether respondent judge committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying petitioner's motion to expunge private respondents' answer with counterclaims on the ground that said pleading was not served personally; moreover, there was no written explanation as to why personal service was not accomplished, as required by Section 11 of Rule 13 of the 1997 Rules of Civil Procedure.

The antecedents are not disputed.

On 10 July 1997, petitioner, as plaintiff, filed before the Regional Trial Court (RTC) in Parañaque, Metro Manila, a complaint for recovery of possession and damages with prayer for a writ of replevin 1 against herein private respondents. The case was docketed as Civil Case No. 97-0304 and was assigned to Branch 260 of said court, presided over by public respondent Judge Helen Bautista-Ricafort.

Summonses and copies of the complaint were forthwith served on private respondents. On 25 July 1997, their counsel filed a notice of appearance with urgent ex-parte motion for extension of time to plead, 2 which the court granted in its order of 4 August 1997. 3

On 8 August 1997, private respondents, as defendants, filed their "Answer (with Counterclaims).'' 4 A copy thereof was furnished counsel for petitioner by registered mail; however, the pleading did not contain any written explanation as to why service was not made personally upon petitioner-plaintiff, as required by Section 11 of Rule 13 of the 1997 Rules of Civil Procedure.

On 11 August 1997, petitioner filed a motion to expunge the "Answer (with Counterclaims)" and to declare herein private respondents in default, 5 alleging therein that the latter did not observe the mandate of the aforementioned Section 11, and that there was:

[A]bsolutely no valid reason why defendant[s] should not have personally served plaintiff's . . . counsel with [a] copy of their answer [as] (t)he office of

defendant's (sic) counsel, Atty. Froilan Cabaltera, is just a stone [sic] throw away from the office of [petitioner's] counsel, with an estimate (sic) distance of about 200 meters more or less.

Petitioner further alleged that the post office was "about ten (10) times farther from the office of Atty. Cabaltera,"

On 15 August 1997, private respondents filed their opposition 6 to the abovementioned motion, alleging that petitioner's "rigid and inflexible reliance on the provisions of Section 11, Rule 13 . . . is an adventitious resort to technicality and is contrary to Section 6 of Rule 3 . . . which admonishes that said Rules 'shall be liberally construed in order to promote their objective in securing a just, speedy and inexpensive disposition of [e]very action and proceeding;'" and that Section 11, Rule 13 notwithstanding, private respondents "religiously complied with [Section 5 of Rule 13] by personally present[ing] to the clerk of court their said Answer . . . furnishing a copy thereof to the counsel for [petitioner] by way of registered mail."

On 8 September 1997, public respondent Judge Bautista-Ricafort issued an order 7 stating that under Section 11 of Rule 13 "it is within the discretion of the [trial court] whether to consider the pleading as filed or not," and denying, for lack of merit, petitioner's motion to expunge the "Answer (with Counterclaims)" and to declare private respondents in default.

Petitioner immediately moved for reconsideration 8 of the order, but public respondent Judge Bautista-Ricafort denied this motion in her order 9 of 17 November 1997. The order justified the denial in this wise:

Sec. 6 [of] Rule 1 of the 1997 Rules of Civil Procedure ordains that the Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding.

Liberal construction of the rules and the pleading is the controlling principle to effect substantial justice.

As pointed out by the Supreme Court in Alonso vs. Villamor, 16 Phil. 315, "the error in this case is purely technical. To take advantage of it for other purposes than to cure it, does not appeal to a fair sense of justice. Its presentation as fatal to plaintiff a [sic] case smacks of skill rather than right. A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is rather, a contest in which each contending party fully and fairly lays before the Court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections or form of technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust."

While it is desirable that the above Rules be faithfully and even meticulously observed, courts should not strict about procedural lapses that do not really impair the proper administration of justice. Furthermore, it is well settled that litigations should, as much as possible be decided on their merits and not on technicalities.

49

Petitioner thus filed the instant special civil action of certiorari, contending that public respondent Judge Bautista-Ricafort committed grave abuse of discretion amounting to lack or excess of jurisdiction when she admitted private respondents' "Answer (with Counterclaims)" notwithstanding private respondents' clear, admitted and inexcusable violation of Section 11, Rule 13 of the 1997 Rules of Civil Procedure, in that: (a) the "Answer (with Counterclaims)" was not served personally upon petitioner's counsel despite the undisputed fact that the offices of private respondents' counsel and that of petitioner's counsel are only about 200 meters away from each other; and (b) the Answer did not contain any explanation as to why the answer was not served personally.

In their Comment, filed in compliance with the resolution of 2 February 1998, and to which petitioner filed a Reply, private respondents aver that public respondent Judge Bautista-Ricafort correctly admitted private respondents' "Answer (with Counterclaims)" in light of Section 6, Rule 1 of the 1997 Rules of Civil Procedure; that Section 11 of Rule 13 begins with the phrase "whenever practicable," thereby suggesting that service by mail may still be effected depending on the relative priority of the pleading sought to be filed; and when service is not done personally, it is more prudent and judicious for the courts to require a written explanation rather than to expunge the pleading outright or consider the same as not being filed.

In view of the importance of the issue raised, which is, undoubtedly, one of the first impression, the Court resolved to give due course to the petition and consider it submitted for decision on the basis of the pleadings filed by the parties.

Sec. 5, Rule 13 of the 1997 Rules of Civil Procedure prescribes two modes of service of pleadings, motions, notices, orders, judgments and other papers, namely: (1) personal service; and (2) service by mail. The first is governed by Section 6, while the second, by Section 7 of said Rule. If service cannot be done either personally or by mail, substituted service may be resorted to under Section 8 thereof.

Pursuant, however, to Section 11 of Rule 13, service and filing of pleadings and other papers must, whenever practicable, be done personally; and if made through other modes, the party concerned must provide a written explanation as to why the service or filing was not done personally. The section reads:

Sec. 11. Priorities in modes of service and filing. — Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed. (n)

Note that Section 11 refers to both service of pleadings and other papers on the adverse party or his counsel as provided for in Sections 6, 7 and 8; and to the filing of pleadings and other papers in court.

Personal service and filing are preferred for obvious reasons. Plainly, such should expedite action or resolution on a pleading, motion or other paper; and conversely, minimize, if not eliminate, delays likely to be incurred if service or filing is done by mail, considering the inefficiency of the postal service. Likewise, personal service will do away with the practice of some lawyers who, wanting to appear clever, resort to the following less than ethical practices: (1) serving or filing pleadings by mail to catch opposing counsel off-guard, thus leaving the latter

with little or no time to prepare, for instance, responsive pleadings or an opposition; or (2) upon receiving notice from the post office that the registered parcel containing the pleading of or other paper from the adverse party may be claimed, unduly procrastinating before claiming the parcel, or, worse, not claiming it at all, thereby causing undue delay in the disposition of such pleading or other papers.

If only to underscore the mandatory nature of this innovation to our set of adjective rules requiring personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion to consider a pleading or paper as not filed if the other modes of service or filing were resorted to and no written explanation was made as to why personal service was not done in the first place. The exercise of discretion must, necessarily, consider the practicability of personal service, for Section 11 itself begins with the clause "whenever practicable."

We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil Procedure, personal service and filing is the general rule, and resort to other modes of service and filing, the exception. Henceforth, whenever personal service or filing is practicable, in light of the circumstances of time, place and person, personal service or filing is mandatory. Only when personal service or filing is not practicable may resort to other modes be had, which must then be accompanied by a written explanation as to why personal service or filing was not practicable to begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the importance of the subject matter of the case or the issues involved therein, and the prima facie merit of the pleading sought to be expunged for violation of Section 11. This Court cannot rule otherwise, lest we allow circumvention of the innovation introduced by the 1997 Rules in order to obviate delay in the administration of justice.

Here, the proximity between the offices of opposing counsel was established; moreover, that the office of private respondents' counsel was "ten times farther" from the post office than the distance separating the offices of opposing counsel. Of course, proximity would seem to make personal service most practicable, but exceptions may nonetheless apply. For instance, where the adverse party or opposing counsel to be served with a pleading seldom reports to office and no employee is regularly present to receive pleadings, or where service is done on the last day of the reglementary period and the office of the adverse party or opposing counsel to be served is closed, for whatever reason.

Returning, however, to the merits of this case, in view of the proximity between the offices of opposing counsel and the absence of any attendant explanation as to why personal service of the answer was not effected, indubitably, private respondents' counsel violated Section 11 of Rule 13 and the motion to expunge was prima facie meritorious. However, the grant or denial of said motion nevertheless remained within the sound exercise of the trial court's discretion. Thus, as guided by Section 6, Rule 1 of the 1997 Rules of Civil Procedure, which ordains that the Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action or proceeding, as well as by the dictum laid down in Alonso v. Villamor, 16 Phil. 315 [1910], the trial court opted to exercise its discretion in favor of admitting the "Answer (with Counterclaims)," instead of expunging it from the record.

To our mind, if motions to expunge or strike out pleadings for violation of Section 11 of Rule 13 were to be indiscriminately resolved under Section 6 of Rule 1 or Alonzo v. Villamor and other analogous cases, then Section 11 would become meaningless and its sound purpose negated. Nevertheless, we sustain the challenged ruling of the trial court, but for reasons other than those provided for in the challenged order.

50

The 1997 Rules of Civil Procedure took effect only on 1 July 1997, while the questioned "Answer (with Counterclaims)" was filed only on 8 August 1997, or on the 39th day following the effectivity of the 1997 Rules. Hence, private respondents' counsel may not have been fully aware of the requirements and ramifications of Section 11, Rule 13. In fact, as pointed out by petitioner's counsel, in another case where private respondents' counsel was likewise opposing counsel, the latter similarly failed to comply with Section 11.

It has been several months since the 1997 Rules of Civil Procedure took effect. In the interim, this Court has generally accommodated parties and counsel who failed to comply with the requirement of a written explanation whenever personal service or filing was not practicable, guided, in the exercise of our discretion, by the primary objective of Section 11, the importance of the subject matter of the case, the issues involved and the prima facie merit of the challenged pleading. However, as we have in the past, for the guidance of the Bench and Bar, strictest compliance with Section 11 of Rule 13 is mandated one month from promulgation of this Decision.

WHEREFORE, the instant petition is DISMISSED considering that while the justification for the denial of the motion to expunge the "Answer (with Counterclaims)" may not necessarily be correct, yet, for the reasons above stated, the violation of Section 11 of Rule 13 may be condoned.

No pronouncement as to costs.

SO ORDERED.

Vitug, Panganiban and Quisumbing, JJ., concur.

Bellosillo, J., Please see Separate Opinion.

 

 

 

Separate Opinions

 

BELLOSILLO, J., separate opinion;

This case involves the proper application of Sec. 11, Rule 13, of the 1997 Rules of Civil Procedure, which took effect 1 July 1997.

Restating the facts, on 10 July 1997 petitioner herein filed against private respondents a Complaint (For: Recovery of Possession and Damages with Prayer for Writ of Replevin) in the Regional Trial Court of Parañaque against private respondents. On 8 August 1997, after seeking

an extension of ten (10) days from the expiration of its reglementary period to respond, private respondents filed their Answer (with Counterclaims) furnishing counsel for petitioner copy thereof by registered mail.

Alleging violation of Sec. 11, Rule 13, of the 1997 Rules of Civil Procedure, petitioner filed a Motion to Expunge Answer with Counterclaim and Declare Defendants in Default for the reason that the Answer was not served personally on its counsel but only by registered mail.

On 8 September 1997 respondent Judge Helen Bautista Ricafort of RTC-Br. 260, Parañaque City, denied the motion to expunge as well as to reconsider her denial "for lack of merit," holding that under Sec. 11 of Rule 13 "it is within the discretion of the Court whether to consider a pleading as filed or not."

Indeed, the trial court took too lightly Sec. 11, Rule 13, of the 1997 Rules of Civil Procedure which provides —

Sec. 11. Priorities in modes of service and filing. — Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed.

I find it difficult to agree with respondent Judge that under the above provision it is solely within the discretion of the trial court whether to consider the pleading as filed or not. Section 11 requires that service and filing of pleadings and other papers shall be done personally, whenever practicable. In other words, when personal service is not done, the party who fails to comply with the requirement must explain why. This makes personal service and filing of pleadings mandatory, especially as the rule specifically uses the word "shall," unless personal service and filing are shown to be impractical. At this stage, the exercise of discretion by the judge does not yet come into play.

In case personal service and filing are neither practical nor feasible then — and only then — can the parties avail of other modes of service and filing, e.g., by registered mail. But resort to other modes must be accompanied by a written explanation why service and filing are not done personally. From that explanation, the judge will then determine whether personal service and filing are indeed impractical so that resort to other modes may be made. It is only at this stage when the judge may properly exercise his discretion — and only upon the explanation given.

In the case before us, private respondents gave no explanation why they resorted to service by registered mail and not by personal service. Absent any explanation, respondent judge was without any hypothesis on which to anchor her finding and conclusion that personal service was not practicable. In such a situation, respondent judge could not exercise any discretion and, consequently, could not deny petitioner's motion to expunge the answer "for lack of merit." Respondent judge did not even cite a single reason why personal service was not availed of by private respondents. Consequently, the conclusion that the motion to strike out private respondents' answer filed by petitioner should be denied "for lack of merit," was without any basis, thus amounting to grave abuse of discretion on the part of respondent judge.

51

To emphasize, the court's discretion can only be exercised soundly if there exists some factual basis for it. The explanation required of the parties serves as the authority for the judge's exercise of discretion. Without any explanation, the judge cannot wield any discretion, much less dismiss the motion to expunge by simply saying that it lacks merit.

Thus, speaking of discretionary power of a trial judge, I said as early as 2 October 1987 in Rayat Export Industries, Inc. v. Lorenzana 1 that —

Where no explanation whatsoever was given justifying the absence of a party whose presence was required, hence, there was no factual milieu upon which discretion may be exercised, the discretionary power of the court to declare him non-suited or as in default becomes mandatory.

Stated differently, where no explanation is offered to justify resort to service of pleading by mail, or other modes of service (and filing for that matter), in lieu of the preferred personal service, hence, no factual milieu is provided upon which judicial discretion may be brought into play, the discretionary power of the court to expunge the pleading becomes mandatory and a disregard thereof constitutes grave abuse of discretion.

Sec. 11 of Rule 13 provides for priorities in the modes of service and filing of pleadings. By priority we mean an order of preference in the service thereof, such that the first alternative must be availed of, and only upon its non-availability may the second and succeeding options be resorted to. Admittedly, the offices of petitioner's counsel and that of private respondents are located just about two hundred (200) meters from each other — the office of petitioner's counsel at 235 Salcedo St., Legaspi Village, Makati City, and that of private respondents' counsel at 132 Amorsolo St., Legaspi Village, Makati City. For lack of any explanation from private respondents, we cannot determine the reason why they served and filed their pleading by registered mail instead of personally serving and filing them.

Personal service and filing are obviously preferred so as to fasttrack the decongestion of court dockets. No less than our present Constitution mandates the promulgation of rules that shall provide a simplified and inexpensive procedure for the speedy disposition of cases. 2 In fact, the 1997 Rules of Civil Procedure is required to be construed to promote its objective of securing a just, expeditious and inexpensive disposition of every action and proceeding; hence, strict compliance with the rules is strongly favored. Taking judicial notice of the inadequacy of our postal service, it is to the advantage of both parties if they avail of personal service and filing of pleadings in order to resolve their case soonest.

Prescinding from the foregoing, I cannot agree with the ponencia that "the grant or denial of said motion (to expunge) nevertheless remains within the sound exercise of the trial court's discretion." Alonso v. Villasor 3 upon which the ponencia is premised cannot be invoked. The issue in Alonso involved merely a defect in form, a defect which did not prejudice the substantial rights of the opposing party. In the instant case, the deviation is not merely formal. It involves non-compliance with the mandatory requirement of Sec. 11 of Rule 13.

I ask: Would it not have been more appropriate and proper for respondent judge to start by requiring compliance with Sec. 11, Rule 13, and grant the motion of petitioner to expunge the answer for obvious non-compliance therewith which requires personal service, and on a motion for reconsideration by private respondents explaining the non-observance of the rule, if such motion is filed, grant reconsideration in the exercise of the court's discretion? At least the

message would have been clear that the rule should first and foremost be obeyed before the same may be relaxed upon exercise of discretion based on a reasonable explanation.

While I am constrained to yield for the moment to the majority pro hac vice in view of the recency of the rule concerned, I am afraid we might be sending the wrong signals to our trial judges that a rule of procedure, particularly Sec. 11, Rule 13, may be taken lightly, if not ignored completely, despite its mandatory character and its publication in a newspaper of general circulation that it was to take effect 1 July 1997 or a year ago. Observance of the 1997 Rules of Civil Procedure, I submit, was never meant to be a useless exercise, otherwise, the dedicated efforts of its architects would be fruitless. Such lackadaisical attitude in the proper observance of the rules of procedure, regretfully, is one of the culprits in docket congestion and delay.

 

Separate Opinions

BELLOSILLO, J., separate opinion;

This case involves the proper application of Sec. 11, Rule 13, of the 1997 Rules of Civil Procedure, which took effect 1 July 1997.

Restating the facts, on 10 July 1997 petitioner herein filed against private respondents a Complaint (For: Recovery of Possession and Damages with Prayer for Writ of Replevin) in the Regional Trial Court of Parañaque against private respondents. On 8 August 1997, after seeking an extension of ten (10) days from the expiration of its reglementary period to respond, private respondents filed their Answer (with Counterclaims) furnishing counsel for petitioner copy thereof by registered mail.

Alleging violation of Sec. 11, Rule 13, of the 1997 Rules of Civil Procedure, petitioner filed a Motion to Expunge Answer with Counterclaim and Declare Defendants in Default for the reason that the Answer was not served personally on its counsel but only by registered mail.

On 8 September 1997 respondent Judge Helen Bautista Ricafort of RTC-Br. 260, Parañaque City, denied the motion to expunge as well as to reconsider her denial "for lack of merit," holding that under Sec. 11 of Rule 13 "it is within the discretion of the Court whether to consider a pleading as filed or not."

Indeed, the trial court took too lightly Sec. 11, Rule 13, of the 1997 Rules of Civil Procedure which provides —

Sec. 11. Priorities in modes of service and filing. — Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed.

I find it difficult to agree with respondent Judge that under the above provision it is solely within the discretion of the trial court whether to consider the pleading as filed or not. Section 11

52

requires that service and filing of pleadings and other papers shall be done personally, whenever practicable. In other words, when personal service is not done, the party who fails to comply with the requirement must explain why. This makes personal service and filing of pleadings mandatory, especially as the rule specifically uses the word "shall," unless personal service and filing are shown to be impractical. At this stage, the exercise of discretion by the judge does not yet come into play.

In case personal service and filing are neither practical nor feasible then — and only then — can the parties avail of other modes of service and filing, e.g., by registered mail. But resort to other modes must be accompanied by a written explanation why service and filing are not done personally. From that explanation, the judge will then determine whether personal service and filing are indeed impractical so that resort to other modes may be made. It is only at this stage when the judge may properly exercise his discretion — and only upon the explanation given.

In the case before us, private respondents gave no explanation why they resorted to service by registered mail and not by personal service. Absent any explanation, respondent judge was without any hypothesis on which to anchor her finding and conclusion that personal service was not practicable. In such a situation, respondent judge could not exercise any discretion and, consequently, could not deny petitioner's motion to expunge the answer "for lack of merit." Respondent judge did not even cite a single reason why personal service was not availed of by private respondents. Consequently, the conclusion that the motion to strike out private respondents' answer filed by petitioner should be denied "for lack of merit," was without any basis, thus amounting to grave abuse of discretion on the part of respondent judge.

To emphasize, the court's discretion can only be exercised soundly if there exists some factual basis for it. The explanation required of the parties serves as the authority for the judge's exercise of discretion. Without any explanation, the judge cannot wield any discretion, much less dismiss the motion to expunge by simply saying that it lacks merit.

Thus, speaking of discretionary power of a trial judge, I said as early as 2 October 1987 in Rayat Export Industries, Inc. v. Lorenzana 1 that —

Where no explanation whatsoever was given justifying the absence of a party whose presence was required, hence, there was no factual milieu upon which discretion may be exercised, the discretionary power of the court to declare him non-suited or as in default becomes mandatory.

Stated differently, where no explanation is offered to justify resort to service of pleading by mail, or other modes of service (and filing for that matter), in lieu of the preferred personal service, hence, no factual milieu is provided upon which judicial discretion may be brought into play, the discretionary power of the court to expunge the pleading becomes mandatory and a disregard thereof constitutes grave abuse of discretion.

Sec. 11 of Rule 13 provides for priorities in the modes of service and filing of pleadings. By priority we mean an order of preference in the service thereof, such that the first alternative must be availed of, and only upon its non-availability may the second and succeeding options be resorted to. Admittedly, the offices of petitioner's counsel and that of private respondents are located just about two hundred (200) meters from each other — the office of petitioner's counsel at 235 Salcedo St., Legaspi Village, Makati City, and that of private respondents' counsel at 132 Amorsolo St., Legaspi Village, Makati City. For lack of any explanation from private respondents,

we cannot determine the reason why they served and filed their pleading by registered mail instead of personally serving and filing them.

Personal service and filing are obviously preferred so as to fasttrack the decongestion of court dockets. No less than our present Constitution mandates the promulgation of rules that shall provide a simplified and inexpensive procedure for the speedy disposition of cases. 2 In fact, the 1997 Rules of Civil Procedure is required to be construed to promote its objective of securing a just, expeditious and inexpensive disposition of every action and proceeding; hence, strict compliance with the rules is strongly favored. Taking judicial notice of the inadequacy of our postal service, it is to the advantage of both parties if they avail of personal service and filing of pleadings in order to resolve their case soonest.

Prescinding from the foregoing, I cannot agree with the ponencia that "the grant or denial of said motion (to expunge) nevertheless remains within the sound exercise of the trial court's discretion." Alonso v. Villasor 3 upon which the ponencia is premised cannot be invoked. The issue in Alonso involved merely a defect in form, a defect which did not prejudice the substantial rights of the opposing party. In the instant case, the deviation is not merely formal. It involves non-compliance with the mandatory requirement of Sec. 11 of Rule 13.

I ask: Would it not have been more appropriate and proper for respondent judge to start by requiring compliance with Sec. 11, Rule 13, and grant the motion of petitioner to expunge the answer for obvious non-compliance therewith which requires personal service, and on a motion for reconsideration by private respondents explaining the non-observance of the rule, if such motion is filed, grant reconsideration in the exercise of the court's discretion? At least the message would have been clear that the rule should first and foremost be obeyed before the same may be relaxed upon exercise of discretion based on a reasonable explanation.

While I am constrained to yield for the moment to the majority pro hac vice in view of the recency of the rule concerned, I am afraid we might be sending the wrong signals to our trial judges that a rule of procedure, particularly Sec. 11, Rule 13, may be taken lightly, if not ignored completely, despite its mandatory character and its publication in a newspaper of general circulation that it was to take effect 1 July 1997 or a year ago. Observance of the 1997 Rules of Civil Procedure, I submit, was never meant to be a useless exercise, otherwise, the dedicated efforts of its architects would be fruitless. Such lackadaisical attitude in the proper observance of the rules of procedure, regretfully, is one of the culprits in docket congestion and delay.

53

FIRST DIVISION G.R. No. 134468 August 29, 2002 NATIONAL STEEL CORPORATION petitioner,  vs. COURT OF APPEALS, FORMER FIFTH DIVISION, RENE OFRENEO, in his capacity as Voluntary Arbitrator, and NSC-HDCTC MONTHLY-DAILY EMPLOYEES ORGANIZATION-FFW, respondents. AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Resolution of the Court of Appeals dated November 25, 19971 which dismissed National Steel Corporation’s petition for review on the ground that the verification and certification of non-forum shopping were signed not by the petitioner but by its counsel of record, as well as the subsequent Resolution dated July 2, 19982 which denied petitioner’s motion for reconsideration.

The antecedent facts of the case are as follows:

In December of 1993, a dispute arose between petitioner National Steel Corporation (NSC) and respondent NSC-HDCTC Monthly/Daily Employees Organization-FFW (union) regarding the grant of Productivity and Quality Bonus and the Fiscal Year-End Incentive Award in the company. Both parties agreed to submit the case for voluntary arbitration.

On April 3, 1995, representatives of NSC and the union appeared before Voluntary Arbitrator Rene Ofreneo and defined the issues of their dispute thus:

"Whether or not there was a diminution of the 1993 Fiscal Year-End Productivity and Quality Profit-Sharing Incentive Benefit annually granted by the Company, per CBA, and if there was, whether or not there was just cause for the diminution of this benefit by management, and if without just cause, what should be the remedy."3

The union was of the position that the company violated Article XII, Section 3 of their CBA when it stopped, since 1993, giving Productivity and Quality Bonus and Fiscal Year-End Incentive Award. Said CBA provision provides:

"ARTICLE XII

ECONOMIC ADJUSTMENTS

x x x

"SECTION 3. Productivity and Quality Bonus – The COMPANY shall grant productivity and quality bonus whenever, in the exclusive determination of the COMPANY, the production and quality targets for the immediately preceding period justify the granting of such bonus. The amount of the bonus shall be left to the sole discretion of the COMPANY.

"The productivity and quality bonus provided herein shall be separate from and in addition to the 13th month pay provided by law and the fiscal year-end incentive award traditionally granted by the COMPANY."4

The union claimed that these benefits were demandable because the granting of such benefits was not only provided for by the CBA but had also become the practice in the firm from 1989 to 1993. Also, the incentive pay was not dependent on the profit situation of the company since the company gave the incentive pay in

1989 and 1990 despite the latter’s admission of difficult financial operations.5

The company on the other hand contended that the matter of granting productivity and quality bonus was discretionary on its part consistent with its exercise of management prerogatives and assessment of production targets, while the distribution of the Fiscal Year-End Incentive Award was dependent on corporate performance.6

On July 19, 1996 public respondent Voluntary Arbitrator Ofreneo issued a decision ruling as follows:

" 1. There is no merit in the demand of the Union for a productivity and quality bonus in 1993.

" 2. The demand of the Union for the distribution of the year-end incentive award is in order.

" 3. The said incentive award shall be computed based on the Company’s past practice in the determination of such award.

"SO ORDERED."7

On August 2, 1996, the NSC filed a Partial Motion for Reconsideration8 with respect to the award of the year-end incentive which was denied by Arbitrator Ofreneo.9 On October 31, 1996, the NSC filed a petition for review with the Court of Appeals.10

On November 25, 1997, the Court of Appeals issued a Resolution dismissing the company’s petition for review on the ground that it failed to comply with the requirements of Revised Circular No. 28-91 and Administrative Circular No. 04-94 on forum shopping. The pertinent portions of the decision read:

"xxx We hold that Atty. Roberto C. Padilla, one of the counsels of record, then, of the petitioner is not a real party in interest or the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit but a retained counsel with mere incidental interest and therefore, not the ‘petitioner’ or ‘plaintiff, petitioner, applicant or principal party seeking relief’ required by law to certify under oath to the facts and/or undertakings stated in Revised Circular No. 28-91 and Administrative Circular No. 04-94."

"Consequently, the Court hereby RESOLVES to GRANT the `Motion to Dismiss Appellant’s Petition for Review.’

"SO ORDERED."11

On December 17, 1997, NSC filed a Motion for Reconsideration12 of the resolution. But this was denied in a Resolution13 dated July 2, 1998 where the appellate court found that:

"x x x absent any authority from the petitioner corporation’s board of directors to sue in its behalf, the counsel of record is without personality to sue x x x.

"xxx           xxx           xxx

"ACCORDINGLY, the Motion for Reconsideration filed by the petitioner NATIONAL

54

STEEL CORPORATION is DENIED.

"SO ORDERED."14

Hence this petition raising the following grounds:

"A. NSC’S COUNSEL OF RECORD WAS DULY AUTHORIZED TO REPRESENT NSC IN THE PREPARATION OF THE PETITION FOR REVIEW FILED BEFORE THE COURT OF APPEALS.

"B. THE VERIFICATION CUM CERTIFICATION OF PETITIONER’S COUNSEL OF RECORD WAS TRUTHFUL IN ALL RESPECTS.

"C. THE DISMISSAL OF THE PETITION FOR REVIEW BEFORE THE COURT OF APPEALS ON A PURELY TECHNICAL GROUND VIOLATES PETITIONER’S RIGHT TO DUE PROCESS AND OPPRESSIVELY DEPRIVED THE LATTER OF SUBSTANTIVE JUSTICE."15

Simply stated, the pertinent issues of this case are as follows: (1) May the signature of petitioner’s counsel be deemed sufficient for the purposes of Revised Circular No. 28-91 and Administrative Circular No. 04-94; and (2) granting that the petition a quo should have been allowed, did the voluntary arbitrator commit any error in granting the demand of the union for the distribution of the year-end incentive award?

We will first resolve the issue on the certification against forum shopping.

Circular No. 28-91 was put in place to deter the practice of some party-litigants of simultaneously pursuing remedies in different forums for such practice works havoc upon orderly judicial procedure.16

In the case at bar, the certification was signed by petitioner’s counsel. Petitioner argues that contrary to the findings of the Court of Appeals, NSC’s counsel of record was duly authorized to represent them not only before the Voluntary Arbitrator but also to prepare the petition for review filed before the Court of Appeals. To support this claim, petitioner attached to its petition before this Court a Secretary’s Certificate dated December 16, 1997 which states that:

"x x x [B]ased on the records of the Corporation, Atty. Roberto C. Padilla, with office address at the 2nd floor, Chere Bldg., Del Pilar St., Iligan City is the legal counsel of the Corporation on a general retainer and is duly authorized to represent the latter and to act on its behalf in several cases, including "National Steel Corporation v. Rene E. Ofreneo and NSC-HDCTC Monthly-Daily Employees Organization-FFW", docketed as CA-G.R. SP No. 42431 before the Fifth Division of the Court of Appeals."17

Counsel of petitioner, Atty. Padilla also submitted a Verification cum Certification where he stated that he prepared the petition upon the explicit instructions of the VP-Marketing & Resident Manager of petitioner corporation.18

Petitioner explains that powers of corporations organized under the Corporation Code shall be exercised by the board of directors; that the exercise of such powers may be done indirectly through delegation; that pursuant to the exercise of its powers, the corporation through its Board of Directors, may employ such persons as it may need to carry on the operations of the corporate business; that hence, with the express authorization by NSC’s board of directors, Atty. Padilla was conferred

with enough authority to sign the Verification cum Certification in the petition for review filed before the Court of Appeals;19 that assuming arguendo there is no express authorization from NSC, still Atty. Padilla is impliedly authorized to file the petition for review before the Court of Appeals in line with its obligation to take all steps or do all acts necessary or incidental to the regular and orderly prosecution or management of the suit; that respondent union never questioned the authority of Atty. Padilla to represent NSC in the proceedings before the Voluntary Arbitrator; that the union is therefore absolutely estopped from questioning Atty. Padilla’s authority to file the petition for review before the Court of Appeals;20 that the dismissal of the petition for review on a purely technical ground violated petitioner’s right to due process and oppressively deprived it of substantive justice as enunciated in Section 6, Rule 1, as well as previous rulings of this Court which upheld the primacy of substantial justice over technical rules of procedure.21

For its part, respondent union claims that petitioner violated Rule 13, Section 11 of the Rules of Court anent the priorities in modes of service and filing;22 that the Court of Appeals did not err in dismissing NSC’s petition for review because it was not duly verified by the petitioner as required by the rules; that the petition filed before the appellate court did not have a Secretary’s Certificate stating the authority of Atty. Padilla to represent petitioner corporation; and that it was only after the Court of Appeals dismissed their petition in a Resolution dated November 25, 1997 that petitioner attached said Certificate dated December 16, 1997.23

We rule in favor of petitioner and hold that the Court of Appeals erred in dismissing the petition.

In the case of BA Savings Bank vs. Sia,24 this Court has ruled that the certificate of non-forum shopping required by Supreme Court Circular No. 28-91 may be signed, for and on behalf of a corporation, by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such document.

The reason is that:

"Unlike natural persons, corporations may perform physical actions only through properly delegated individuals; namely, its officers and/or agents.

"xxx           xxx           xxx

"The corporation, such as the petitioner, has no powers except those expressly conferred on it by the Corporation Code and those that are implied by or are incidental to its existence. In turn, a corporation exercises said powers through its board of directors and / or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by specific act of the board of directors. `All acts within the powers of a corporation may be performed by agents of its selection; and, except so far as limitations or restrictions which may be imposed by special "charter, by-law, or statutory provisions, the same general principles of law which govern the relation of agency for a natural person govern the officer or agent of a corporation, of whatever status or rank, in respect to his power to act for the corporation; and agents once appointed, or members acting in their stead, are subject to the same rules, liabilities and incapacities as are agents of individuals and private persons.’

"xxx           xxx           xxx

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"x x x For who else knows of the circumstances required in the Certificate but its own retained counsel. Its regular officers, like its board chairman and president, may not even know the details required therein."25

While it is admitted that the authorization of petitioner’s counsel was submitted to the appellate court only after the issuance of its Resolution dismissing the petition based on non-compliance with the aforesaid Circular, we hold that in view of the peculiar circumstances of the present case and in the interest of substantial justice, the procedural defect may be set aside, pro hac vice. As held by the Court: "Technical rules of procedure should be used to promote, not frustrate, justice. While the swift unclogging of court dockets is a laudable objective, the granting of substantial justice is an even more urgent ideal."26 By recognizing the signature of the authorized counsel in the certification, no circumvention of the rationale, that is to prevent the ills of forum shopping, is committed.27 As we have held in many cases:

"x x x Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly administration of justice and should not be so interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal of all rules of procedure --which is to achieve substantial justice as expeditiously as possible.

"The fact that the Circular requires that it be strictly complied with merely underscores its mandatory nature in that it cannot be dispensed with or its requirements altogether disregarded, but it does not thereby interdict substantial compliance with its provisions under justifiable circumstances."28

We will now delve into the merits of the case.

Petitioner NSC assails the following portions of the award of the Voluntary Arbitrator:

"In view of the foregoing, therefore, the Voluntary Arbitrator rules as follows:

"xxx           xxx           xxx

"2. The demand of the Union for the distribution of the year-end incentive award is in order.

"3. The said incentive award shall be computed based on the Company’s past practice in the determination of such award.

"SO ORDERED."29

Petitioner claims that the Voluntary Arbitrator erred when he ordered petitioner to pay private respondent the 1993 fiscal year-end incentive award despite his own findings that the mid-year incentive pay already paid by the petitioner is an advance payment of the fiscal year-end incentive award;30 that the "Mid-year Incentive Pay" granted to private respondent is itself a bonus not demandable upon NSC as it is not provided for in the CBA; that this notwithstanding, it has granted the Mid-year Incentive Pay to members of respondent union every year in the years 1989, 1990, 1991, 1992, and 1993; that in every instance of the grant, petitioner expressly stated that the Mid-year Incentive Pay is an advance against the Fiscal Year-end Incentive Pay; that petitioner’s express reservation that the payment of the Mid-year

Incentive Pay is an advance payment of the fiscal year-end incentive award has been repeatedly brought to the attention of the Voluntary Arbitrator;31 that the Voluntary Arbitrator committed serious misapprehension of facts when he ruled that the grant of the fiscal year-end incentive award has become traditional and has therefore ripened into a demandable right of private respondent;32 and that for a period of four (4) years i.e., from 1990 through 1993, the fiscal year-end incentive award has been granted only twice -- in 1991 and in 1992.33

In his Award, the Voluntary Arbitrator established as a fact that:

"x x x the Company gave the following benefits to the workers:

"1. Mid-Year Incentive Pay, which was usually given as an "advance" for the Year-End Incentive Bonus. The Company announced the Mid-Year Incentive Pay through memos issued on the following dates:

August 25, 1989,

August 1, 1990,

August 2, 1991,

August 24,1992, and

August 31, 1993."34

Yet, petitioner complains that despite the above findings that the Mid-year Incentive Awards were given as advances to the Year-End Incentive Awards, the Voluntary Arbitrator still ruled that the NSC was liable to pay respondent Union the Year-End Incentive Pay, explaining that:

"xxx           xxx           xxx

"In the case of the fiscal year-end incentive award, the CBA provision has a general proviso which reads: `The productivity and quality bonus provided herein shall be separate from and in addition to the 13th month pay provided by law and the fiscal year-end incentive award traditionally granted by the COMPANY.’ Thus, unlike in the productivity and quality bonus, the CBA simply recognizes the fiscal year-end incentive award as one of the benefits accorded to the workers, just like the 13th month pay. It even added the phrase `traditionally granted by the COMPANY.’ There were no qualifications or conditions specified for the granting of this benefit similar to those governing the granting of the productivity and quality bonus. The Company argued that like the productivity and quality bonus, the granting of year-end incentive award is a management prerogative and is guided by the same conditions, e.g., actual performance versus production targets, that it uses when it decides on the granting of productivity and quality bonus. As "pointed out, the CBA is silent on this. And if there are doubts on the interpretation of the manner by which benefits like year-end incentive award shall be given, the Labor Code has long ago decided that all such doubts shall be interpreted in favor of Labor.

"Moreover, the capacity of the Company to grant this incentive pay is also not at issue. A closer scrutiny of the Company loss for 1993 shows that the net loss of P36 million registered for that year was due to the deduction of `expenses paid in retained earnings’ amounting to P358 "million from the original P322 million net

56

income. The audited data gathered by the Union from the Commission on Audit also show that while earnings and incomes declined from 1992 to 1993, the Company still registered a healthy level of profitability."35

We rule in favor of petitioner.

This Court has stressed that voluntary arbitrators, by the nature of their functions, act in quasi-judicial capacity. Hence, as a rule, findings of facts by quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters, are accorded not only respect but even finality if they are supported by substantial evidence, even if not overwhelming or preponderant.36 However, in spite of statutory provisions making "final" the decisions of certain administrative agencies, we have taken cognizance of petitions questioning such decisions where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law were brought to our attention.37

In the present petition for review on certiorari, we find the award of the 1993 year-end incentive to be patently erroneous which amounts not only to grave abuse of discretion but also to denial of substantial justice. The Voluntary Arbitrator himself found that the mid-year incentive pay for 1993 was given by petitioner as an advance payment of the fiscal year-end incentive award for the same year. Indubitably, to require petitioner to pay again the same incentive pay at the year-end of 1993 is obviously a great injustice that would be committed against petitioner.

WHEREFORE, we SET ASIDE the Resolutions dated November 25, 1997 and July 2, 1998 of the Court of Appeals.

The Award of Voluntary Arbitrator Ofreneo dated July 19, 1996 is modified to the effect that the grant of the claim for the distribution of the 1993 year-end incentive award is DELETED.

SO ORDERED.

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