cases rem 23-38

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 138739 July 6, 2000

RADIOWEALTH FINANCE COMPANY, petitioner, vs.Spouses VICENTE and MA. SUMILANG DEL ROSARIO, respondents.

D E C I S I O N

PANGANIBAN, J.:

When a demurrer to evidence granted by a trial court is reversed on appeal, the reviewing court cannot remand the case for further proceedings. Rather, it should render judgment on the basis of the evidence proffered by the plaintiff. Inasmuch as defendants in the present case admitted the due execution of the Promissory Note both in their Answer and during the pretrial, the appellate court should have rendered judgment on the bases of that Note and on the other pieces of evidence adduced during the trial.

The Case

Before us is a Petition for Review on Certiorari of the December 9, 1997 Decision 1 and the May 3, 1999 Resolution2 of the Court of Appeals in CA-GR CV No. 47737. The assailed Decision disposed as follows:

"WHEREFORE, premises considered, the appealed order (dated November 4, 1994) of the Regional Trial Court (Branch XIV) in the City of Manila in Civil Case No. 93-66507 is hereby REVERSED and SET ASIDE. Let the records of this case be remanded to the court a quo for further proceedings. No pronouncement as to costs."3

The assailed Resolution denied the petitioner’s Partial Motion for Reconsideration.4

The Facts

The facts of this case are undisputed. On March 2, 1991, Spouses Vicente and Maria Sumilang del Rosario (herein respondents), jointly and severally executed, signed and delivered in favor of Radiowealth Finance Company (herein petitioner), a Promissory Note5 for P138,948. Pertinent provisions of the Promissory Note read:

"FOR VALUE RECEIVED, on or before the date listed below, I/We promise to pay jointly and severally Radiowealth Finance Co. or order the sum of ONE HUNDRED THIRTY EIGHT

http://www.lawphil.net/judjuris/juri2000/jul2000/gr_138739_2000.html#fnt5





THOUSAND NINE HUNDRED FORTY EIGHT Pesos (P138,948.00) without need of notice or demand, in installments as follows:

P11,579.00 payable for 12 consecutive months starting on ________ 19__ until the amount of P11,579.00 is fully paid. Each installment shall be due every ____ day of each month. A late payment penalty charge of two and a half (2.5%) percent per month shall be added to each unpaid installment from due date thereof until fully paid.

x x x x x x x x x

It is hereby agreed that if default be made in the payment of any of the installments or late payment charges thereon as and when the same becomes due and payable as specified above, the total principal sum then remaining unpaid, together with the agreed late payment charges thereon, shall at once become due and payable without need of notice or demand.

x x x x x x x x x

If any amount due on this Note is not paid at its maturity and this Note is placed in the hands of an attorney or collection agency for collection, I/We jointly and severally agree to pay, in addition to the aggregate of the principal amount and interest due, a sum equivalent to ten (10%) per cent thereof as attorney’s and/or collection fees, in case no legal action is filed, otherwise, the sum will be equivalent to twenty-five (25%) percent of the amount due which shall not in any case be less than FIVE HUNDRED PESOS (P500.00) plus the cost of suit and other litigation expenses and, in addition, a further sum of ten per cent (10%) of said amount which in no case shall be less than FIVE HUNDRED PESOS (P500.00), as and for liquidated damages."6

Thereafter, respondents defaulted on the monthly installments. Despite repeated demands, they failed to pay their obligations under their Promissory Note.

On June 7, 1993, petitioner filed a Complaint7 for the collection of a sum of money before the Regional Trial Court of Manila, Branch 14.8 During the trial, Jasmer Famatico, the credit and collection officer of petitioner, presented in evidence the respondents’ check payments, the demand letter dated July 12, 1991, the customer’s ledger card for the respondents, another demand letter and Metropolitan Bank dishonor slips. Famatico admitted that he did not have personal knowledge of the transaction or the execution of any of these pieces of documentary evidence, which had merely been endorsed to him.

On July 4, 1994, the trial court issued an Order terminating the presentation of evidence for the petitioner.9 Thus, the latter formally offered its evidence and exhibits and rested its case on July 5, 1994.

Respondents filed on July 29, 1994 a Demurrer to Evidence10 for alleged lack of cause of action. On November 4, 1994, the trial court dismissed11 the complaint for failure of petitioner to substantiate its claims, the evidence it had presented being merely hearsay.







On appeal, the Court of Appeals (CA) reversed the trial court and remanded the case for further proceedings.

Hence, this recourse.12

Ruling of the Court of Appeals

According to the appellate court, the judicial admissions of respondents established their indebtedness to the petitioner, on the grounds that they admitted the due execution of the Promissory Note, and that their only defense was the absence of an agreement on when the installment payments were to begin. Indeed, during the pretrial, they admitted the genuineness not only of the Promissory Note, but also of the demand letter dated July 12, 1991. Even if the petitioner’s witness had no personal knowledge of these documents, they would still be admissible "if the purpose for which [they are] produced is merely to establish the fact that the statement or document was in fact made or to show its tenor[,] and such fact or tenor is of independent relevance."

Besides, Articles 19 and 22 of the Civil Code require that every person must -- in the exercise of rights and in the performance of duties -- act with justice, give all else their due, and observe honesty and good faith. Further, the rules on evidence are to be liberally construed in order to promote their objective and to assist the parties in obtaining just, speedy and inexpensive determination of an action.

Issue

The petitioner raises this lone issue:

"The Honorable Court of Appeals patently erred in ordering the remand of this case to the trial court instead of rendering judgment on the basis of petitioner’s evidence."13

For an orderly discussion, we shall divide the issue into two parts: (a) legal effect of the Demurrer to Evidence, and (b) the date when the obligation became due and demandable.

The Court’s Ruling

The Petition has merit. While the CA correctly reversed the trial court, it erred in remanding the case "for further proceedings."

Consequences of a Reversal, on Appeal, of a Demurrer to Evidence

Petitioner contends that if a demurrer to evidence is reversed on appeal, the defendant should be deemed to have waived the right to present evidence, and the appellate court should render judgment on the basis of the evidence submitted by the plaintiff. A remand to the trial court "for further proceedings" would be an outright defiance of Rule 33, Section 1 of the 1997 Rules of Court.



On the other hand, respondents argue that the petitioner was not necessarily entitled to its claim, simply on the ground that they lost their right to present evidence in support of their defense when the Demurrer to Evidence was reversed on appeal. They stress that the CA merely found them indebted to petitioner, but was silent on when their obligation became due and demandable.

The old Rule 35 of the Rules of Court was reworded under Rule 33 of the 1997 Rules, but the consequence on appeal of a demurrer to evidence was not changed. As amended, the pertinent provision of Rule 33 reads as follows:

"SECTION 1. Demurrer to evidence.—After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence."

Explaining the consequence of a demurrer to evidence, the Court in Villanueva Transit v. Javellana15 pronounced:

"The rationale behind the rule and doctrine is simple and logical. The defendant is permitted, without waiving his right to offer evidence in the event that his motion is not granted, to move for a dismissal (i.e., demur to the plaintiff’s evidence) on the ground that upon the facts as thus established and the applicable law, the plaintiff has shown no right to relief. If the trial court denies the dismissal motion, i.e., finds that plaintiff’s evidence is sufficient for an award of judgment in the absence of contrary evidence, the case still remains before the trial court which should then proceed to hear and receive the defendant’s evidence so that all the facts and evidence of the contending parties may be properly placed before it for adjudication as well as before the appellate courts, in case of appeal. Nothing is lost. The doctrine is but in line with the established procedural precepts in the conduct of trials that the trial court liberally receive all proffered evidence at the trial to enable it to render its decision with all possibly relevant proofs in the record, thus assuring that the appellate courts upon appeal have all the material before them necessary to make a correct judgment, and avoiding the need of remanding the case for retrial or reception of improperly excluded evidence, with the possibility thereafter of still another appeal, with all the concomitant delays. The rule, however, imposes the condition by the same token that if his demurrer is granted by the trial court, and the order of dismissal is reversed on appeal , the movant losses his right to present evidence in his behalf and he shall have been deemed to have elected to stand on the insufficiency of plaintiff’s case and evidence. In such event, the appellate court which reverses the order of dismissal shall proceed to render judgment on the merits on the basis of plaintiff’s evidence." (Underscoring supplied)

In other words, defendants who present a demurrer to the plaintiff’s evidence retain the right to present their own evidence, if the trial court disagrees with them; if the trial court agrees


with them, but on appeal, the appellate court disagrees with both of them and reverses the dismissal order, the defendants lose the right to present their own evidence.16 The appellate court shall, in addition, resolve the case and render judgment on the merits, inasmuch as a demurrer aims to discourage prolonged litigations.17

In the case at bar, the trial court, acting on respondents’ demurrer to evidence, dismissed the Complaint on the ground that the plaintiff had adduced mere hearsay evidence. However, on appeal, the appellate court reversed the trial court because the genuineness and the due execution of the disputed pieces of evidence had in fact been admitted by defendants.

Applying Rule 33, Section 1 of the 1997 Rules of Court, the CA should have rendered judgment on the basis of the evidence submitted by the petitioner. While the appellate court correctly ruled that "the documentary evidence submitted by the [petitioner] should have been allowed and appreciated xxx," and that "the petitioner presented quite a number of documentary exhibits xxx enumerated in the appealed order,"18 we agree with petitioner that the CA had sufficient evidence on record to decide the collection suit. A remand is not only frowned upon by the Rules, it is also logically unnecessary on the basis of the facts on record.

Due and Demandable Obligation

Petitioner claims that respondents are liable for the whole amount of their debt and the interest thereon, after they defaulted on the monthly installments.

Respondents, on the other hand, counter that the installments were not yet due and demandable. Petitioner had allegedly allowed them to apply their promotion services for its financing business as payment of the Promissory Note. This was supposedly evidenced by the blank space left for the date on which the installments should have commenced.19 In other words, respondents theorize that the action for immediate enforcement of their obligation is premature because its fulfillment is dependent on the sole will of the debtor. Hence, they consider that the proper court should first fix a period for payment, pursuant to Articles 1180 and 1197 of the Civil Code.

This contention is untenable. The act of leaving blank the due date of the first installment did not necessarily mean that the debtors were allowed to pay as and when they could. If this was the intention of the parties, they should have so indicated in the Promissory Note. However, it did not reflect any such intention.

On the contrary, the Note expressly stipulated that the debt should be amortized monthly in installments of P11,579 for twelve consecutive months. While the specific date on which each installment would be due was left blank, the Note clearly provided that each installment should be payable each month.

Furthermore, it also provided for an acceleration clause and a late payment penalty, both of which showed the intention of the parties that the installments should be paid at a definite date. Had they intended that the debtors could pay as and when they could, there would have been no need for these two clauses.





Verily, the contemporaneous and subsequent acts of the parties manifest their intention and knowledge that the monthly installments would be due and demandable each month.20 In this case, the conclusion that the installments had already became due and demandable is bolstered by the fact that respondents started paying installments on the Promissory Note, even if the checks were dishonored by their drawee bank. We are convinced neither by their avowals that the obligation had not yet matured nor by their claim that a period for payment should be fixed by a court.

Convincingly, petitioner has established not only a cause of action against the respondents, but also a due and demandable obligation. The obligation of the respondents had matured and they clearly defaulted when their checks bounced. Per the acceleration clause, the whole debt became due one month (April 2, 1991) after the date of the Note because the check representing their first installment bounced.

As for the disputed documents submitted by the petitioner, the CA ruling in favor of their admissibility, which was not challenged by the respondents, stands. A party who did not appeal cannot obtain affirmative relief other than that granted in the appealed decision.21

It should be stressed that respondents do not contest the amount of the principal obligation.1âwphi1 Their liability as expressly stated in the Promissory Note and found by the CA is "P13[8],948.0022 which is payable in twelve (12) installments at P11,579.00 a month for twelve (12) consecutive months." As correctly found by the CA, the "ambiguity" in the Promissory Note is clearly attributable to human error.23

Petitioner, in its Complaint, prayed for "14% interest per annum from May 6, 1993 until fully paid." We disagree.1âwphi1 The Note already stipulated a late payment penalty of 2.5 percent monthly to be added to each unpaid installment until fully paid. Payment of interest was not expressly stipulated in the Note. Thus, it should be deemed included in such penalty.

In addition, the Note also provided that the debtors would be liable for attorney’s fees equivalent to 25 percent of the amount due in case a legal action was instituted and 10 percent of the same amount as liquidated damages. Liquidated damages, however, should no longer be imposed for being unconscionable.24 Such damages should also be deemed included in the 2.5 percent monthly penalty. Furthermore, we hold that petitioner is entitled to attorney’s fees, but only in a sum equal to 10 percent of the amount due which we deem reasonable under the proven facts.25

The Court deems it improper to discuss respondents' claim for moral and other damages. Not having appealed the CA Decision, they are not entitled to affirmative relief, as already explained earlier.26

WHEREFORE, the Petition is GRANTED. The appealed Decision is MODIFIED in that the remand is SET ASIDE and respondents are ordered TO PAY P138,948, plus 2.5 percent penalty charge per month beginning April 2, 1991 until fully paid, and 10 percent of the amount due as attorney’s fees. No costs.

SO ORDERED.









SECOND DIVISION

G.R. No. 152878 May 5, 2003

RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs.MAGWIN MARKETING CORPORATION, NELSON TIU, BENITO SY and ANDERSON UY, respondents.

BELLOSILLO, J.:

WE ARE PERTURBED that this case should drag this Court in the banal attempts to decipher the hazy and confused intent of the trial court in proceeding with what would have been a simple, straightforward and hardly arguable collection case. Whether the dismissal without prejudice for failure to prosecute was unconditionally reconsidered, reversed and set aside to reinstate the civil case and have it ready for pre-trial are matters which should have been clarified and resolved in the first instance by the court a quo. Unfortunately, this feckless imprecision of the trial court became the soup stock of the parties and their lawyers to further delay the case below when they could have otherwise put things in proper order efficiently and effectively.

On 4 March 1999 petitioner Rizal Commercial Banking Corporation (RCBC) filed a complaint for recovery of a sum of money with prayer for a writ of preliminary attachment against respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy.1 On 26 April 1999, the trial court issued a writ of attachment.2 On 4 June 1999 the writ was returned partially satisfied since only a parcel of land purportedly owned by defendant Benito Sy was attached.3 In the meantime, summons was served on each of the defendants, respondents herein, who filed their respective answers, except for defendant Gabriel Cheng who was dropped without prejudice as party-defendant as his whereabouts could not be located.4 On 21 September 1999 petitioner moved for an alias writ of attachment which on 18 January 2000 the court a quo denied.5

Petitioner did not cause the case to be set for pre-trial.6 For about six (6) months thereafter, discussions between petitioner and respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy, as parties in Civil Case No. 99-518, were undertaken to restructure the indebtedness of respondent Magwin Marketing Corporation.7 On 9 May 2000 petitioner approved a debt payment scheme for the corporation which on 15 May 2000 was communicated to the latter by means of a letter dated 10 May 2000 for the conformity of its officers, i.e., respondent Nelson Tiu as President/General Manager of Magwin Marketing Corporation and respondent Benito Sy as Director thereof.8 Only respondent Nelson Tiu affixed his signature on the letter to signify his agreement to the terms and conditions of the restructuring.9

On 20 July 2000 the RTC of Makati City, on its own initiative, issued an Order dismissing without prejudice Civil Case No. 99-518 for failure of petitioner as plaintiff therein to "prosecute its action for an unreasonable length of time . . .."10 On 31 July 2000 petitioner moved for reconsideration of the Order by informing the trial court of respondents' unremitting desire to settle the case amicably through a loan restructuring program.11 On 22 August 2000 petitioner notified the trial court of the acquiescence thereto of respondent Nelson Tiu as an officer of Magwin Marketing Corporation and defendant in the civil case.12

On 8 September 2000 the court a quo issued an Order reconsidering the dismissal without prejudice of Civil Case No. 99-518 -

Acting on plaintiff's "Motion for Reconsideration" of the Order dated 20 July 2000 dismissing this case for failure to prosecute, it appearing that there was already conformity to the restructuring of defendants' indebtedness with plaintiff by defendant Nelson Tiu, President of defendant corporation per "Manifestation and Motion" filed by plaintiff on 22 August 2000, there being probability of settlement among the parties, as prayed for, the Order dated 20 July 2000 is hereby set aside.

Plaintiff is directed to submit the compromise agreement within 15 days from receipt hereof. Failure on the part of plaintiff to submit the said agreement shall cause the imposition of payment of the required docket fees for re-filing of this case.13

On 27 July 2000 petitioner filed in Civil Case No. 99-518 a Manifestation and Motion to Set Case for Pre-Trial Conference alleging that "[t]o date, only defendant Nelson Tiu had affixed his signature on the May 10, 2000 letter which informed the defendants that plaintiff [herein petitioner] already approved defendant Magwin Marketing Corporations request for restructuring of its loan obligations to plaintiff but subject to the terms and conditions specified in said letter."14 This motion was followed on 5 October 2000 by petitioner's Supplemental Motion to Plaintiffs Manifestation and Motion to Set Case for Pre-Trial Conference affirming that petitioner "could not submit a compromise agreement because only defendant Nelson Tiu had affixed his signature on the May 10, 2000 letter . . .."15 Respondent Anderson Uy opposed the foregoing submissions of petitioner while respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy neither contested nor supported them.16

The trial court, in an undated Order (although a date was later inserted in the Order), denied petitioner's motion to calendar Civil Case No. 99-518 for pre-trial stating that -

Acting on plaintiff's [herein petitioner] "Manifestation and Motion to Set Case for Pre-Trial Conference," the "Opposition" filed by defendant Uy and the subsequent "Supplemental Motion" filed by plaintiff; defendant Uy's "Opposition," and plaintiff's "Reply;" for failure of the plaintiff to submit a compromise agreement pursuant to the Order dated 8 September 2000 plaintiff's motion to set case for pre-trial conference is hereby denied.17

On 15 November 2000 petitioner filed its Notice of Appeal from the 8 September 2000 Order of the trial court as well as its undated Order in Civil Case No. 99-518. On 16 November 2000 the

trial court issued two (2) Orders, one of which inserted the date "6 November 2000" in the undated Order rejecting petitioner's motion for pre-trial in the civil case, and the other denying due course to the Notice of Appeal on the ground that the "Orders dated 8 September 2000 and 6 November 2000 are interlocutory orders and therefore, no appeal may be taken . . .."18

On 7 December 2000 petitioner elevated the Orders dated 8 September 2000, 6 November 2000 and 16 November 2000 of the trial court to the Court of Appeals in a petition for certiorari under Rule 65 of the Rules of Civil Procedure.19 In the main, petitioner argued that the court a quo had no authority to compel the parties in Civil Case No. 99-518 to enter into an amicable settlement nor to deny the holding of a pre-trial conference on the ground that no compromise agreement was turned over to the court a quo . 20

On 28 September 2001 the appellate court promulgated its Decision dismissing the petition for lack of merit and affirming the assailed Orders of the trial court21 holding that -

. . . although the language of the September 8, 2000 Order may not be clear, yet, a careful reading of the same would clearly show that the setting aside of the Order dated July 20, 2000 which dismissed petitioner's complaint . . . for failure to prosecute its action for an unreasonable length of time is dependent on the following conditions, to wit: a) The submission of the compromise agreement by petitioner within fifteen (15) days from notice; and b) Failure of petitioner to submit the said compromise agreement shall cause the imposition of the payment of the required docket fees for the re-filing of the case; so much so that the non-compliance by petitioner of condition no. 1 would make condition no. 2 effective, especially that petitioner's manifestation and motion to set case for pre-trial conference and supplemental motion . . . [were] denied by the respondent judge in his Order dated November 6, 2000, which in effect means that the Order dated July 20, 2000 was ultimately not set aside considering that a party need not pay docket fees for the re-filing of a case if the original case has been revived and reinstated.22

On 2 April 2002 reconsideration of the Decision was denied; hence, this petition.

In the instant case, petitioner maintains that the trial court cannot coerce the parties in Civil Case No. 99-518 to execute a compromise agreement and penalize their failure to do so by refusing to go forward with the pre-trial conference. To hold otherwise, so petitioner avers, would violate Art. 2029 of the Civil Code which provides that "[t]he court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise," and this Court's ruling in Goldloop Properties, Inc. v. Court of Appeals23 where it was held that the trial court cannot dismiss a complaint for failure of the parties to submit a compromise agreement.

On the other hand, respondent Anderson Uy filed his comment after several extensions asserting that there are no special and important reasons for undertaking this review. He also alleges that petitioner's attack is limited to the Order dated 8 September 2000 as to whether it is conditional as the Court of Appeals so found and the applicability to this case of the ruling in Goldloop Properties, Inc. v. Court of Appeals. Respondent Uy claims that the Order reconsidering the dismissal of Civil Case No. 99-518 without prejudice is on its face contingent upon the submission of the compromise agreement which in the first place was the principal reason of

petitioner to justify the withdrawal of the Order declaring his failure to prosecute the civil case. He further contends that the trial court did not force the parties in the civil case to execute a compromise agreement, the truth being that it dismissed the complaint therein for petitioner's dereliction.

Finally, respondent Uy contests the relevance of Goldloop Properties, Inc. v. Court of Appeals, and refers to its incongruence with the instant case, i.e., that the complaint of petitioner was dismissed for failure to prosecute and not for its reckless disregard to present an amicable settlement as was the situation in Goldloop Properties, Inc., and that the dismissal was without prejudice, in contrast with the dismissal with prejudice ordered in the cited case. For their part, respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy waived their right to file a comment on the instant petition and submitted the same for resolution of this Court.24

The petition of Rizal Commercial Banking Corporation is meritorious.

It directs our attention to questions of substance decided by the courts a quo plainly in a way not in accord with applicable precedents as well as the accepted and usual course of judicial proceedings; it offers special and important reasons that demand the exercise of our power of supervision and review. Furthermore, petitioner's objections to the proceedings below encompass not only the Order of 8 September 2000 but include the cognate Orders of the trial court of 6 and 16 November 2000. This is evident from the prayer of the instant petition which seeks to reverse and set aside the Decision of the appellate court and to direct the trial court to proceed with the pre-trial conference in Civil Case No. 99-518. Evidently, the substantive issue involved herein is whether the proceedings in the civil case should progress, a question which at bottom embroils all the Orders affirmed by the Court of Appeals.

On the task at hand, we see no reason why RTC-Br. 135 of Makati City should stop short of hearing the civil case on the merits. There is no substantial policy worth pursuing by requiring petitioner to pay again the docket fees when it has already discharged this obligation simultaneously with the filing of the complaint for collection of a sum of money. The procedure for dismissed cases when re-filed is the same as though it was initially lodged, i.e., the filing of answer, reply, answer to counter-claim, including other foot-dragging maneuvers, except for the rigmarole of raffling cases which is dispensed with since the re-filed complaint is automatically assigned to the branch to which the original case pertained.25 A complaint that is re-filed leads to the re-enactment of past proceedings with the concomitant full attention of the same trial court exercising an immaculate slew of jurisdiction and control over the case that was previously dismissed, which in the context of the instant case is a waste of judicial time, capital and energy.

What judicial benefit do we derive from starting the civil case all over again, especially where three (3) of the four (4) defendants, i.e., Magwin Marketing Corporation, Nelson Tiu and Benito Sy, have not contested petitioner's plea before this Court and the courts a quo to advance to pre-trial conference? Indeed, to continue hereafter with the resolution of petitioner's complaint without the usual procedure for the re-filing thereof, we will save the court a quo invaluable time and other resources far outweighing the docket fees that petitioner would be forfeiting should we rule otherwise.

Going over the specifics of this petition and the arguments of respondent Anderson Uy, we rule that the Order of 8 September 2000 did not reserve conditions on the reconsideration and reversal of the Order dismissing without prejudice Civil Case No. 99-518. This is quite evident from its text which does not use words to signal an intent to impose riders on the dispositive portion -



Contrary to respondent Uy's asseverations, the impact of the second paragraph upon the first is simply to illustrate what the trial court would do after setting aside the dismissal without prejudice: submission of the compromise agreement for the consideration of the trial court. Nothing in the second paragraph do we read that the reconsideration is subject to two (2) qualifications. Certainly far from it, for in Goldloop Properties, Inc. v. Court of Appeals28 a similar directive, i.e., "[t]he parties are given a period of fifteen (15) days from today within which to submit a Compromise Agreement," was held to mean that "should the parties fail in their negotiations the proceedings would continue from where they left off." Goldloop Properties, Inc. further said that its order, or a specie of it, did not constitute an agreement or even an expectation of the parties that should they fail to settle their differences within the stipulated number of days their case would be dismissed.

The addition of the second sentence in the second paragraph does not change the absolute nullification of the dismissal without prejudice decreed in the first paragraph. The sentence "[f]ailure on the part of plaintiff to submit the said agreement shall cause the imposition of payment of the required docket fees for re-filing of this case" is not a directive to pay docket fees but only a statement of the event that may result in its imposition. The reason for this is that the trial court could not have possibly made such payment obligatory in the same civil case, i.e., Civil Case No. 99-518, since docket fees are defrayed only after the dismissal becomes final and executory and when the civil case is re-filed.

It must be emphasized however that once the dismissal attains the attribute of finality, the trial court cannot impose legal fees anew because a final and executory dismissal although without prejudice divests the trial court of jurisdiction over the civil case as well as any residual power to order anything relative to the dismissed case; it would have to wait until the complaint is docketed once again.29 On the other hand, if we are to concede that the trial court retains jurisdiction over Civil Case No. 99-518 for it to issue the assailed Orders, a continuation of the hearing thereon would not trigger a disbursement for docket fees on the part of petitioner as this

would obviously imply the setting aside of the order of dismissal and the reinstatement of the complaint.

Indubitably, it is speculative to reckon the effectivity of the Order of dismissal without prejudice to the presentation of the compromise agreement. If we are to admit that the efficacy of the invalidation of the Order of dismissal is dependent upon this condition, then we must inquire: from what date do we count the fifteen (15)-day reglementary period within which the alleged revival of the order of dismissal began to run? Did it commence from the lapse of the fifteen (15) days provided for in the Order of 8 September 2000? Or do we count it from the 6 November 2000 Order when the trial court denied the holding of a pre-trial conference? Or must it be upon petitioner's receipt of the 16 November 2000 Order denying due course to its Notice of Appeal? The court a quo could not have instituted an Order that marked the proceedings before it with a shadow of instability and chaos rather than a semblance of constancy and firmness.

The subsequent actions of the trial court also belie an intention to revive the Order of dismissal without prejudice in the event that petitioner fails to submit a compromise agreement. The Orders of 6 and 16 November 2000 plainly manifest that it was retaining jurisdiction over the civil case, a fact which would not have been possible had the dismissal without prejudice been resuscitated. Surely, the court a quo could not have denied on 6 November 2000 petitioner's motion to calendar Civil Case No. 99-518 for pre-trial if the dismissal had been restored to life in the meantime. By then the dismissal without prejudice would have already become final and executory so as to effectively remove the civil case from the docket of the trial court.

The same is true with the Order of 16 November 2000 denying due course to petitioner's Notice of Appeal. There would have been no basis for such exercise of discretion because the jurisdiction of the court a quo over the civil case would have been discharged and terminated by the presumed dismissal thereof. Moreover, we note the ground for denying due course to the appeal: the "Orders dated 8 September 2000 and 6 November 2000 are interlocutory orders and therefore, no appeal may be taken from . . .."30 This declaration strongly suggests that something more was to be accomplished in the civil case, thus negating the claim that the Order of dismissal without prejudice was resurrected upon the parties' failure to yield a compromise agreement. A "final order" issued by a court has been defined as one which disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else to be done but to enforce by execution what has been determined by the court, while an "interlocutory order" is one which does not dispose of a case completely but leaves something more to be decided upon.31

Besides the semantic and consequential improbabilities of respondent Uy's argument, our ruling in Goldloop Properties, Inc., is decisive of the instant case. In Goldloop Properties, Inc., we reversed the action of the trial court in dismissing the complaint for failure of the plaintiff to prosecute its case, which was in turn based on its inability to forge a compromise with the other parties within fifteen (15) days from notice of the order to do so and held -

Since there is nothing in the Rules that imposes the sanction of dismissal for failing to submit a compromise agreement, then it is obvious that the dismissal of the complaint on the basis thereof amounts no less to a gross procedural infirmity assailable by certiorari.

For such submission could at most be directory and could not result in throwing out the case for failure to effect a compromise. While a compromise is encouraged, very strongly in fact, failure to consummate one does not warrant any procedural sanction, much less an authority to jettison a civil complaint worth P4,000,000.00 . . . Plainly, submission of a compromise agreement is never mandatory, nor is it required by any rule.32

As also explained therein, the proper course of action that should have been taken by the court a quo, upon manifestation of the parties of their willingness to discuss a settlement, was to suspend the proceedings and allow them reasonable time to come to terms (a) If willingness to discuss a possible compromise is expressed by one or both parties; or (b) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer, pursuant to Art. 2030 of the Civil Code. If despite efforts exerted by the trial court and the parties the negotiations still fail, only then should the action continue as if no suspension had taken place.33

Ostensibly, while the rules allow the trial court to suspend its proceedings consistent with the policy to encourage the use of alternative mechanisms of dispute resolution, in the instant case, the trial court only gave the parties fifteen (15) days to conclude a deal. This was, to say the least, a passive and paltry attempt of the court a quo in its task of persuading litigants to agree upon a reasonable concession.34 Hence, if only to inspire confidence in the pursuit of a middle ground between petitioner and respondents, we must not interpret the trial court's Orders as dismissing the action on its own motion because the parties, specifically petitioner, were anxious to litigate their case as exhibited in their several manifestations and motions.

We reject respondent Uy's contention that Goldloop Properties, Inc. v. Court of Appeals is irrelevant to the case at bar on the dubious reasoning that the complaint of petitioner was dismissed for failure to prosecute and not for the non-submission of a compromise agreement which was the bone of contention in that case, and that the dismissal imposed in the instant case was without prejudice, in contrast to the dismissal with prejudice decreed in the cited case. To begin with, whether the dismissal is with or without prejudice if grievously erroneous is detrimental to the cause of the affected party; Goldloop Properties, Inc. does not tolerate a wrongful dismissal just because it was without prejudice. More importantly, the facts in Goldloop Properties, Inc. involve, as in the instant case, a dismissal for failure to prosecute on the ground of the parties' inability to come up with a compromise agreement within fifteen (15) days from notice of the court's order therein. All told, the parallelism between them is unmistakable.

Even if we are to accept on face value respondent's understanding of Goldloop Properties, Inc. as solely about the failure to submit a compromise agreement, it is apparent that the present case confronts a similar problem. Perhaps initially the issue was one of failure to prosecute, as can be observed from the Order dated 20 July 2000, although later reversed and set aside. But thereafter, in the Order of 6 November 2000, the trial court refused to proceed to pre-trial owing to the "failure of the plaintiff to submit a compromise agreement pursuant to the Order dated 8 September 2000." When the civil case was stalled on account of the trial court's refusal to call the parties to a pre-trial conference, the reason or basis therefor was the absence of a negotiated settlement - a circumstance that takes the case at bar within the plain ambit of

Goldloop Properties, Inc. In any event, given that the instant case merely revolves around the search for a reasonable interpretation of the several Orders of the trial court, i.e., as to whether the dismissal without prejudice was revived upon petitioner's helplessness to perfect an out-of-court arrangement, with more reason must we employ the ruling in Goldloop Properties, Inc. to resolve the parties' differences of opinion.

We also find nothing in the record to support respondent Uy's conclusion that petitioner has been mercilessly delaying the prosecution of Civil Case No. 99-518 to warrant its dismissal. A complaint may be dismissed due to plaintiff's fault: (a) if he fails to appear during a scheduled trial, especially on the date for the presentation of his evidence in chief, or when so required at the pre-trial; (b) if he neglects to prosecute his action for an unreasonable length of time; or (c) if he does not comply with the rules or any order of the court. None of these was obtaining in the civil case.

While there was a lull of about six (6) months in the prosecution of Civil Case No. 99-518, it must be remembered that respondents themselves contributed largely to this delay. They repeatedly asked petitioner to consider re-structuring the debt of respondent Magwin Marketing Corporation to which petitioner graciously acceded. Petitioner approved a new debt payment scheme that was sought by respondents, which it then communicated to respondent Corporation through a letter for the conformity of the latter's officers, i.e., respondent Nelson Tiu as President/General Manager and respondent Benito Sy as Director thereof. Regrettably, only respondent Nelson Tiu affixed his signature on the letter to signify his concurrence with the terms and conditions of the arrangement. The momentary lag in the civil case was aggravated when respondent Benito Sy for unknown and unexplained reasons paid no heed to the adjustments in the indebtedness although curiously he has not opposed before this Court or the courts a quo petitioner's desire to go ahead with the pre-trial conference.

Admittedly, delay took place in this case but it was not an interruption that should have entailed the dismissal of the complaint even if such was designated as without prejudice. To constitute a sufficient ground for dismissal, the inattention of plaintiff to pursue his cause must not only be prolonged but also be unnecessary and dilatory resulting in the trifling of judicial processes. In the instant case, the adjournment was not only fleeting as it lasted less than six (6) months but was also done in good faith to accommodate respondents' incessant pleas to negotiate. Although the dismissal of a case for failure to prosecute is a matter addressed to the sound discretion of the court, that judgment however must not be abused. The availability of this recourse must be determined according to the procedural history of each case, the situation at the time of the dismissal, and the diligence of plaintiff to proceed therein.35 Stress must also be laid upon the official directive that courts must endeavor to convince parties in a civil case to consummate a fair settlement36 and to mitigate damages to be paid by the losing party who has shown a sincere desire for such give-and-take.37 All things considered, we see no compelling circumstances to uphold the dismissal of petitioner's complaint regardless of its characterization as being without prejudice.

In fine, petitioner cannot be said to have lost interest in fighting the civil case to the end. A court may dismiss a case on the ground of non prosequitur but the real test of the judicious exercise of such power is whether under the circumstances plaintiff is chargeable with want of fitting

assiduousness in not acting on his complaint with reasonable promptitude. Unless a party's conduct is so indifferent, irresponsible, contumacious or slothful as to provide substantial grounds for dismissal, i.e., equivalent to default or non-appearance in the case, the courts should consider lesser sanctions which would still amount to achieving the desired end.38 In the absence of a pattern or scheme to delay the disposition of the case or of a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense rather than wield their authority to dismiss.39

Clearly, another creative remedy was available to the court a quo to attain a speedy disposition of Civil Case No. 99-518 without sacrificing the course of justice. Since the failure of petitioner to submit a compromise agreement was the refusal of just one of herein respondents, i.e., Benito Sy, to sign his name on the conforme of the loan restructure documents, and the common concern of the courts a quo was dispatch in the proceedings, the holding of a pre-trial conference was the best-suited solution to the problem as this stage in a civil action is where issues are simplified and the dispute quickly and genuinely reconciled. By means of pre-trial, the trial court is fully empowered to sway the litigants to agree upon some fair compromise.

Dismissing the civil case and compelling petitioner to re-file its complaint is a dangerous, costly and circuitous route that may end up aggravating, not resolving, the disagreement. This case management strategy is frighteningly deceptive because it does so at the expense of petitioner whose cause of action, perhaps, may have already been admitted by its adverse parties as shown by three (3) of four (4) defendants not willing to contest petitioner's allegations, and more critically, since this approach promotes the useless and thankless duplication of hard work already undertaken by the trial court. As we have aptly observed, "[i]nconsiderate dismissals, even if without prejudice, do not constitute a panacea nor a solution to the congestion of court dockets. While they lend a deceptive aura of efficiency to records of individual judges, they merely postpone the ultimate reckoning between the parties. In the absence of clear lack of merit or intention to delay, justice is better served by a brief continuance, trial on the merits, and final disposition of the cases before the court."40

WHEREFORE, the Petition for Review is GRANTED. The Decision dated 28 September 2001 and Resolution dated 2 April 2002 of the Court of Appeals in CA-G.R. SP No. 62102 are REVERSED and SET ASIDE.

The Orders dated 8 September 2000, 6 November 2000 and 16 November 2000 of the Regional Trial Court, Branch 135, of Makati City, docketed as Civil Case No. 99-518, are also REVERSED and SET ASIDE insofar as these Orders are interpreted to impose upon and collect anew from petitioner RIZAL COMMERCIAL BANKING CORPORATION docket or legal fees for its complaint, or to dismiss without prejudice Civil Case No. 99-518, or to preclude the trial court from calling the parties therein to pre-trial conference, or from proceeding thereafter with dispatch to resolve the civil case.

Civil Case No. 99-518 is deemed REINSTATED in, as it was never taken out from, the dockets of the Regional Trial Court, Branch 135, of Makati City. The trial court is ORDERED to exercise its jurisdiction over Civil Case No. 99-518, to CONDUCT the pre-trial conference therein with dispatch, and to UNDERTAKE thereafter such other proceedings as may be

relevant, without petitioner being charged anew docket or other legal fees in connection with its reinstatement. Costs against respondents.

SO ORDERED.


SECOND DIVISION

G.R. No. 152878 May 5, 2003

RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs.MAGWIN MARKETING CORPORATION, NELSON TIU, BENITO SY and ANDERSON UY, respondents.

BELLOSILLO, J.:

WE ARE PERTURBED that this case should drag this Court in the banal attempts to decipher the hazy and confused intent of the trial court in proceeding with what would have been a simple, straightforward and hardly arguable collection case. Whether the dismissal without prejudice for failure to prosecute was unconditionally reconsidered, reversed and set aside to reinstate the civil case and have it ready for pre-trial are matters which should have been clarified and resolved in the first instance by the court a quo. Unfortunately, this feckless imprecision of the trial court became the soup stock of the parties and their lawyers to further delay the case below when they could have otherwise put things in proper order efficiently and effectively.

On 4 March 1999 petitioner Rizal Commercial Banking Corporation (RCBC) filed a complaint for recovery of a sum of money with prayer for a writ of preliminary attachment against respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy.1 On 26 April 1999, the trial court issued a writ of attachment.2 On 4 June 1999 the writ was returned partially satisfied since only a parcel of land purportedly owned by defendant Benito Sy was attached.3 In the meantime, summons was served on each of the defendants, respondents herein, who filed their respective answers, except for defendant Gabriel Cheng who was dropped without prejudice as party-defendant as his whereabouts could not be located.4 On 21 September 1999 petitioner moved for an alias writ of attachment which on 18 January 2000 the court a quo denied.5

Petitioner did not cause the case to be set for pre-trial.6 For about six (6) months thereafter, discussions between petitioner and respondents Magwin Marketing Corporation, Nelson Tiu, Benito Sy and Anderson Uy, as parties in Civil Case No. 99-518, were undertaken to restructure the indebtedness of respondent Magwin Marketing Corporation.7 On 9 May 2000 petitioner approved a debt payment scheme for the corporation which on 15 May 2000 was communicated to the latter by means of a letter dated 10 May 2000 for the conformity of its officers, i.e.,

respondent Nelson Tiu as President/General Manager of Magwin Marketing Corporation and respondent Benito Sy as Director thereof.8 Only respondent Nelson Tiu affixed his signature on the letter to signify his agreement to the terms and conditions of the restructuring.9

On 20 July 2000 the RTC of Makati City, on its own initiative, issued an Order dismissing without prejudice Civil Case No. 99-518 for failure of petitioner as plaintiff therein to "prosecute its action for an unreasonable length of time . . .."10 On 31 July 2000 petitioner moved for reconsideration of the Order by informing the trial court of respondents' unremitting desire to settle the case amicably through a loan restructuring program.11 On 22 August 2000 petitioner notified the trial court of the acquiescence thereto of respondent Nelson Tiu as an officer of Magwin Marketing Corporation and defendant in the civil case.12

On 8 September 2000 the court a quo issued an Order reconsidering the dismissal without prejudice of Civil Case No. 99-518 -



On 27 July 2000 petitioner filed in Civil Case No. 99-518 a Manifestation and Motion to Set Case for Pre-Trial Conference alleging that "[t]o date, only defendant Nelson Tiu had affixed his signature on the May 10, 2000 letter which informed the defendants that plaintiff [herein petitioner] already approved defendant Magwin Marketing Corporations request for restructuring of its loan obligations to plaintiff but subject to the terms and conditions specified in said letter."14 This motion was followed on 5 October 2000 by petitioner's Supplemental Motion to Plaintiffs Manifestation and Motion to Set Case for Pre-Trial Conference affirming that petitioner "could not submit a compromise agreement because only defendant Nelson Tiu had affixed his signature on the May 10, 2000 letter . . .."15 Respondent Anderson Uy opposed the foregoing submissions of petitioner while respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy neither contested nor supported them.16

The trial court, in an undated Order (although a date was later inserted in the Order), denied petitioner's motion to calendar Civil Case No. 99-518 for pre-trial stating that -

Acting on plaintiff's [herein petitioner] "Manifestation and Motion to Set Case for Pre-Trial Conference," the "Opposition" filed by defendant Uy and the subsequent "Supplemental Motion" filed by plaintiff; defendant Uy's "Opposition," and plaintiff's "Reply;" for failure of the plaintiff to submit a compromise agreement pursuant to the

Order dated 8 September 2000 plaintiff's motion to set case for pre-trial conference is hereby denied.17

On 15 November 2000 petitioner filed its Notice of Appeal from the 8 September 2000 Order of the trial court as well as its undated Order in Civil Case No. 99-518. On 16 November 2000 the trial court issued two (2) Orders, one of which inserted the date "6 November 2000" in the undated Order rejecting petitioner's motion for pre-trial in the civil case, and the other denying due course to the Notice of Appeal on the ground that the "Orders dated 8 September 2000 and 6 November 2000 are interlocutory orders and therefore, no appeal may be taken . . .."18

On 7 December 2000 petitioner elevated the Orders dated 8 September 2000, 6 November 2000 and 16 November 2000 of the trial court to the Court of Appeals in a petition for certiorari under Rule 65 of the Rules of Civil Procedure.19 In the main, petitioner argued that the court a quo had no authority to compel the parties in Civil Case No. 99-518 to enter into an amicable settlement nor to deny the holding of a pre-trial conference on the ground that no compromise agreement was turned over to the court a quo.20

On 28 September 2001 the appellate court promulgated its Decision dismissing the petition for lack of merit and affirming the assailed Orders of the trial court21 holding that -

. . . although the language of the September 8, 2000 Order may not be clear, yet, a careful reading of the same would clearly show that the setting aside of the Order dated July 20, 2000 which dismissed petitioner's complaint . . . for failure to prosecute its action for an unreasonable length of time is dependent on the following conditions, to wit: a) The submission of the compromise agreement by petitioner within fifteen (15) days from notice; and b) Failure of petitioner to submit the said compromise agreement shall cause the imposition of the payment of the required docket fees for the re-filing of the case; so much so that the non-compliance by petitioner of condition no. 1 would make condition no. 2 effective, especially that petitioner's manifestation and motion to set case for pre-trial conference and supplemental motion . . . [were] denied by the respondent judge in his Order dated November 6, 2000, which in effect means that the Order dated July 20, 2000 was ultimately not set aside considering that a party need not pay docket fees for the re-filing of a case if the original case has been revived and reinstated.22

On 2 April 2002 reconsideration of the Decision was denied; hence, this petition.

In the instant case, petitioner maintains that the trial court cannot coerce the parties in Civil Case No. 99-518 to execute a compromise agreement and penalize their failure to do so by refusing to go forward with the pre-trial conference. To hold otherwise, so petitioner avers, would violate Art. 2029 of the Civil Code which provides that "[t]he court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise," and this Court's ruling in Goldloop Properties, Inc. v. Court of Appeals23 where it was held that the trial court cannot dismiss a complaint for failure of the parties to submit a compromise agreement.

On the other hand, respondent Anderson Uy filed his comment after several extensions asserting that there are no special and important reasons for undertaking this review. He also alleges that

petitioner's attack is limited to the Order dated 8 September 2000 as to whether it is conditional as the Court of Appeals so found and the applicability to this case of the ruling in Goldloop Properties, Inc. v. Court of Appeals. Respondent Uy claims that the Order reconsidering the dismissal of Civil Case No. 99-518 without prejudice is on its face contingent upon the submission of the compromise agreement which in the first place was the principal reason of petitioner to justify the withdrawal of the Order declaring his failure to prosecute the civil case. He further contends that the trial court did not force the parties in the civil case to execute a compromise agreement, the truth being that it dismissed the complaint therein for petitioner's dereliction.

Finally, respondent Uy contests the relevance of Goldloop Properties, Inc. v. Court of Appeals, and refers to its incongruence with the instant case, i.e., that the complaint of petitioner was dismissed for failure to prosecute and not for its reckless disregard to present an amicable settlement as was the situation in Goldloop Properties, Inc., and that the dismissal was without prejudice, in contrast with the dismissal with prejudice ordered in the cited case. For their part, respondents Magwin Marketing Corporation, Nelson Tiu and Benito Sy waived their right to file a comment on the instant petition and submitted the same for resolution of this Court.24

The petition of Rizal Commercial Banking Corporation is meritorious. It directs our attention to questions of substance decided by the courts a quo plainly in a way not in accord with applicable precedents as well as the accepted and usual course of judicial proceedings; it offers special and important reasons that demand the exercise of our power of supervision and review. Furthermore, petitioner's objections to the proceedings below encompass not only the Order of 8 September 2000 but include the cognate Orders of the trial court of 6 and 16 November 2000. This is evident from the prayer of the instant petition which seeks to reverse and set aside the Decision of the appellate court and to direct the trial court to proceed with the pre-trial conference in Civil Case No. 99-518. Evidently, the substantive issue involved herein is whether the proceedings in the civil case should progress, a question which at bottom embroils all the Orders affirmed by the Court of Appeals.

On the task at hand, we see no reason why RTC-Br. 135 of Makati City should stop short of hearing the civil case on the merits. There is no substantial policy worth pursuing by requiring petitioner to pay again the docket fees when it has already discharged this obligation simultaneously with the filing of the complaint for collection of a sum of money. The procedure for dismissed cases when re-filed is the same as though it was initially lodged, i.e., the filing of answer, reply, answer to counter-claim, including other foot-dragging maneuvers, except for the rigmarole of raffling cases which is dispensed with since the re-filed complaint is automatically assigned to the branch to which the original case pertained.25 A complaint that is re-filed leads to the re-enactment of past proceedings with the concomitant full attention of the same trial court exercising an immaculate slew of jurisdiction and control over the case that was previously dismissed,26 which in the context of the instant case is a waste of judicial time, capital and energy.

What judicial benefit do we derive from starting the civil case all over again, especially where three (3) of the four (4) defendants, i.e., Magwin Marketing Corporation, Nelson Tiu and Benito Sy, have not contested petitioner's plea before this Court and the courts a quo to advance to pre-

trial conference? Indeed, to continue hereafter with the resolution of petitioner's complaint without the usual procedure for the re-filing thereof, we will save the court a quo invaluable time and other resources far outweighing the docket fees that petitioner would be forfeiting should we rule otherwise.

Going over the specifics of this petition and the arguments of respondent Anderson Uy, we rule that the Order of 8 September 2000 did not reserve conditions on the reconsideration and reversal of the Order dismissing without prejudice Civil Case No. 99-518. This is quite evident from its text which does not use words to signal an intent to impose riders on the dispositive portion -



Contrary to respondent Uy's asseverations, the impact of the second paragraph upon the first is simply to illustrate what the trial court would do after setting aside the dismissal without prejudice: submission of the compromise agreement for the consideration of the trial court. Nothing in the second paragraph do we read that the reconsideration is subject to two (2) qualifications. Certainly far from it, for in Goldloop Properties, Inc. v. Court of Appeals28 a similar directive, i.e., "[t]he parties are given a period of fifteen (15) days from today within which to submit a Compromise Agreement," was held to mean that "should the parties fail in their negotiations the proceedings would continue from where they left off." Goldloop Properties, Inc. further said that its order, or a specie of it, did not constitute an agreement or even an expectation of the parties that should they fail to settle their differences within the stipulated number of days their case would be dismissed.

The addition of the second sentence in the second paragraph does not change the absolute nullification of the dismissal without prejudice decreed in the first paragraph. The sentence "[f]ailure on the part of plaintiff to submit the said agreement shall cause the imposition of payment of the required docket fees for re-filing of this case" is not a directive to pay docket fees but only a statement of the event that may result in its imposition. The reason for this is that the trial court could not have possibly made such payment obligatory in the same civil case, i.e., Civil Case No. 99-518, since docket fees are defrayed only after the dismissal becomes final and executory and when the civil case is re-filed.

It must be emphasized however that once the dismissal attains the attribute of finality, the trial court cannot impose legal fees anew because a final and executory dismissal although without prejudice divests the trial court of jurisdiction over the civil case as well as any residual power to

order anything relative to the dismissed case; it would have to wait until the complaint is docketed once again.29 On the other hand, if we are to concede that the trial court retains jurisdiction over Civil Case No. 99-518 for it to issue the assailed Orders, a continuation of the hearing thereon would not trigger a disbursement for docket fees on the part of petitioner as this would obviously imply the setting aside of the order of dismissal and the reinstatement of the complaint.

Indubitably, it is speculative to reckon the effectivity of the Order of dismissal without prejudice to the presentation of the compromise agreement. If we are to admit that the efficacy of the invalidation of the Order of dismissal is dependent upon this condition, then we must inquire: from what date do we count the fifteen (15)-day reglementary period within which the alleged revival of the order of dismissal began to run? Did it commence from the lapse of the fifteen (15) days provided for in the Order of 8 September 2000? Or do we count it from the 6 November 2000 Order when the trial court denied the holding of a pre-trial conference? Or must it be upon petitioner's receipt of the 16 November 2000 Order denying due course to its Notice of Appeal? The court a quo could not have instituted an Order that marked the proceedings before it with a shadow of instability and chaos rather than a semblance of constancy and firmness.

The subsequent actions of the trial court also belie an intention to revive the Order of dismissal without prejudice in the event that petitioner fails to submit a compromise agreement. The Orders of 6 and 16 November 2000 plainly manifest that it was retaining jurisdiction over the civil case, a fact which would not have been possible had the dismissal without prejudice been resuscitated. Surely, the court a quo could not have denied on 6 November 2000 petitioner's motion to calendar Civil Case No. 99-518 for pre-trial if the dismissal had been restored to life in the meantime. By then the dismissal without prejudice would have already become final and executory so as to effectively remove the civil case from the docket of the trial court.

The same is true with the Order of 16 November 2000 denying due course to petitioner's Notice of Appeal. There would have been no basis for such exercise of discretion because the jurisdiction of the court a quo over the civil case would have been discharged and terminated by the presumed dismissal thereof. Moreover, we note the ground for denying due course to the appeal: the "Orders dated 8 September 2000 and 6 November 2000 are interlocutory orders and therefore, no appeal may be taken from . . .."30 This declaration strongly suggests that something more was to be accomplished in the civil case, thus negating the claim that the Order of dismissal without prejudice was resurrected upon the parties' failure to yield a compromise agreement. A "final order" issued by a court has been defined as one which disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else to be done but to enforce by execution what has been determined by the court, while an "interlocutory order" is one which does not dispose of a case completely but leaves something more to be decided upon.31

Besides the semantic and consequential improbabilities of respondent Uy's argument, our ruling in Goldloop Properties, Inc., is decisive of the instant case. In Goldloop Properties, Inc., we reversed the action of the trial court in dismissing the complaint for failure of the plaintiff to prosecute its case, which was in turn based on its inability to forge a compromise with the other parties within fifteen (15) days from notice of the order to do so and held -

Since there is nothing in the Rules that imposes the sanction of dismissal for failing to submit a compromise agreement, then it is obvious that the dismissal of the complaint on the basis thereof amounts no less to a gross procedural infirmity assailable by certiorari. For such submission could at most be directory and could not result in throwing out the case for failure to effect a compromise. While a compromise is encouraged, very strongly in fact, failure to consummate one does not warrant any procedural sanction, much less an authority to jettison a civil complaint worth P4,000,000.00 . . . Plainly, submission of a compromise agreement is never mandatory, nor is it required by any rule.32

As also explained therein, the proper course of action that should have been taken by the court a quo, upon manifestation of the parties of their willingness to discuss a settlement, was to suspend the proceedings and allow them reasonable time to come to terms (a) If willingness to discuss a possible compromise is expressed by one or both parties; or (b) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer, pursuant to Art. 2030 of the Civil Code. If despite efforts exerted by the trial court and the parties the negotiations still fail, only then should the action continue as if no suspension had taken place.33

Ostensibly, while the rules allow the trial court to suspend its proceedings consistent with the policy to encourage the use of alternative mechanisms of dispute resolution, in the instant case, the trial court only gave the parties fifteen (15) days to conclude a deal. This was, to say the least, a passive and paltry attempt of the court a quo in its task of persuading litigants to agree upon a reasonable concession.34 Hence, if only to inspire confidence in the pursuit of a middle ground between petitioner and respondents, we must not interpret the trial court's Orders as dismissing the action on its own motion because the parties, specifically petitioner, were anxious to litigate their case as exhibited in their several manifestations and motions.

We reject respondent Uy's contention that Goldloop Properties, Inc. v. Court of Appeals is irrelevant to the case at bar on the dubious reasoning that the complaint of petitioner was dismissed for failure to prosecute and not for the non-submission of a compromise agreement which was the bone of contention in that case, and that the dismissal imposed in the instant case was without prejudice, in contrast to the dismissal with prejudice decreed in the cited case. To begin with, whether the dismissal is with or without prejudice if grievously erroneous is detrimental to the cause of the affected party; Goldloop Properties, Inc. does not tolerate a wrongful dismissal just because it was without prejudice. More importantly, the facts in Goldloop Properties, Inc. involve, as in the instant case, a dismissal for failure to prosecute on the ground of the parties' inability to come up with a compromise agreement within fifteen (15) days from notice of the court's order therein. All told, the parallelism between them is unmistakable.

Even if we are to accept on face value respondent's understanding of Goldloop Properties, Inc. as solely about the failure to submit a compromise agreement, it is apparent that the present case confronts a similar problem. Perhaps initially the issue was one of failure to prosecute, as can be observed from the Order dated 20 July 2000, although later reversed and set aside. But thereafter, in the Order of 6 November 2000, the trial court refused to proceed to pre-trial owing to the "failure of the plaintiff to submit a compromise agreement pursuant to the Order dated 8

September 2000." When the civil case was stalled on account of the trial court's refusal to call the parties to a pre-trial conference, the reason or basis therefor was the absence of a negotiated settlement - a circumstance that takes the case at bar within the plain ambit of Goldloop Properties, Inc. In any event, given that the instant case merely revolves around the search for a reasonable interpretation of the several Orders of the trial court, i.e., as to whether the dismissal without prejudice was revived upon petitioner's helplessness to perfect an out-of-court arrangement, with more reason must we employ the ruling in Goldloop Properties, Inc. to resolve the parties' differences of opinion.

We also find nothing in the record to support respondent Uy's conclusion that petitioner has been mercilessly delaying the prosecution of Civil Case No. 99-518 to warrant its dismissal. A complaint may be dismissed due to plaintiff's fault: (a) if he fails to appear during a scheduled trial, especially on the date for the presentation of his evidence in chief, or when so required at the pre-trial; (b) if he neglects to prosecute his action for an unreasonable length of time; or (c) if he does not comply with the rules or any order of the court. None of these was obtaining in the civil case.

While there was a lull of about six (6) months in the prosecution of Civil Case No. 99-518, it must be remembered that respondents themselves contributed largely to this delay. They repeatedly asked petitioner to consider re-structuring the debt of respondent Magwin Marketing Corporation to which petitioner graciously acceded. Petitioner approved a new debt payment scheme that was sought by respondents, which it then communicated to respondent Corporation through a letter for the conformity of the latter's officers, i.e., respondent Nelson Tiu as President/General Manager and respondent Benito Sy as Director thereof. Regrettably, only respondent Nelson Tiu affixed his signature on the letter to signify his concurrence with the terms and conditions of the arrangement. The momentary lag in the civil case was aggravated when respondent Benito Sy for unknown and unexplained reasons paid no heed to the adjustments in the indebtedness although curiously he has not opposed before this Court or the courts a quo petitioner's desire to go ahead with the pre-trial conference.

Admittedly, delay took place in this case but it was not an interruption that should have entailed the dismissal of the complaint even if such was designated as without prejudice. To constitute a sufficient ground for dismissal, the inattention of plaintiff to pursue his cause must not only be prolonged but also be unnecessary and dilatory resulting in the trifling of judicial processes. In the instant case, the adjournment was not only fleeting as it lasted less than six (6) months but was also done in good faith to accommodate respondents' incessant pleas to negotiate. Although the dismissal of a case for failure to prosecute is a matter addressed to the sound discretion of the court, that judgment however must not be abused. The availability of this recourse must be determined according to the procedural history of each case, the situation at the time of the dismissal, and the diligence of plaintiff to proceed therein.35 Stress must also be laid upon the official directive that courts must endeavor to convince parties in a civil case to consummate a fair settlement36 and to mitigate damages to be paid by the losing party who has shown a sincere desire for such give-and-take.37 All things considered, we see no compelling circumstances to uphold the dismissal of petitioner's complaint regardless of its characterization as being without prejudice.

In fine, petitioner cannot be said to have lost interest in fighting the civil case to the end. A court may dismiss a case on the ground of non prosequitur but the real test of the judicious exercise of such power is whether under the circumstances plaintiff is chargeable with want of fitting assiduousness in not acting on his complaint with reasonable promptitude. Unless a party's conduct is so indifferent, irresponsible, contumacious or slothful as to provide substantial grounds for dismissal, i.e., equivalent to default or non-appearance in the case, the courts should consider lesser sanctions which would still amount to achieving the desired end.38 In the absence of a pattern or scheme to delay the disposition of the case or of a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense rather than wield their authority to dismiss.39

Clearly, another creative remedy was available to the court a quo to attain a speedy disposition of Civil Case No. 99-518 without sacrificing the course of justice. Since the failure of petitioner to submit a compromise agreement was the refusal of just one of herein respondents, i.e., Benito Sy, to sign his name on the conforme of the loan restructure documents, and the common concern of the courts a quo was dispatch in the proceedings, the holding of a pre-trial conference was the best-suited solution to the problem as this stage in a civil action is where issues are simplified and the dispute quickly and genuinely reconciled. By means of pre-trial, the trial court is fully empowered to sway the litigants to agree upon some fair compromise.

Dismissing the civil case and compelling petitioner to re-file its complaint is a dangerous, costly and circuitous route that may end up aggravating, not resolving, the disagreement. This case management strategy is frighteningly deceptive because it does so at the expense of petitioner whose cause of action, perhaps, may have already been admitted by its adverse parties as shown by three (3) of four (4) defendants not willing to contest petitioner's allegations, and more critically, since this approach promotes the useless and thankless duplication of hard work already undertaken by the trial court. As we have aptly observed, "[i]nconsiderate dismissals, even if without prejudice, do not constitute a panacea nor a solution to the congestion of court dockets. While they lend a deceptive aura of efficiency to records of individual judges, they merely postpone the ultimate reckoning between the parties. In the absence of clear lack of merit or intention to delay, justice is better served by a brief continuance, trial on the merits, and final disposition of the cases before the court."40

WHEREFORE, the Petition for Review is GRANTED. The Decision dated 28 September 2001 and Resolution dated 2 April 2002 of the Court of Appeals in CA-G.R. SP No. 62102 are REVERSED and SET ASIDE.

The Orders dated 8 September 2000, 6 November 2000 and 16 November 2000 of the Regional Trial Court, Branch 135, of Makati City, docketed as Civil Case No. 99-518, are also REVERSED and SET ASIDE insofar as these Orders are interpreted to impose upon and collect anew from petitioner RIZAL COMMERCIAL BANKING CORPORATION docket or legal fees for its complaint, or to dismiss without prejudice Civil Case No. 99-518, or to preclude the trial court from calling the parties therein to pre-trial conference, or from proceeding thereafter with dispatch to resolve the civil case.

Civil Case No. 99-518 is deemed REINSTATED in, as it was never taken out from, the dockets of the Regional Trial Court, Branch 135, of Makati City. The trial court is ORDERED to exercise its jurisdiction over Civil Case No. 99-518, to CONDUCT the pre-trial conference therein with dispatch, and to UNDERTAKE thereafter such other proceedings as may be relevant, without petitioner being charged anew docket or other legal fees in connection with its reinstatement. Costs against respondents.

SO ORDERED.


THIRD DIVISION

G.R. No. 148090 November 28, 2006

STRONGHOLD INSURANCE COMPANY, INC., Petitioner, vs.HONORABLE NEMESIO S. FELIX, in his capacity as Presiding Judge of Branch 56, Regional Trial Court, Makati City, RICHARD C. JAMORA, Branch Clerk of Court, and EMERITA GARON, Respondents.

D E C I S I O N

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 4 May 2001 Decision2 of the Court of Appeals in CA-G.R. SP No. 63334.

The Antecedent Facts

Emerita Garon ("Garon") filed an action for sum of money docketed as Civil Case No. 99-1051 against Project Movers Realty and Development Corporation ("Project Movers") and Stronghold Insurance Company, Inc. ("Stronghold Insurance"). In an Order3 dated 19 September 2000, the Regional Trial Court of Makati City, Branch 564 ("trial court") granted Garon’s motion for summary judgment. The trial court rendered judgment in favor of Garon, as follows:

1. Defendant Project Movers Realty and Development Corporation is hereby directed to pay plaintiff as follows:

On Promissory Note No. PMRDC 97-12-332:

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(A) The sum of PESOS: Six Million Eighty Eight Thousand Seven Hundred Eighty Three and 68/100 (P6,088,783.68) under PMRDC-97-12-332;

(B) Interest thereon at 36% per annum computed from 19 December 1997 until fully paid;

(C) A penalty of 3% per month computed from 03 November 1998 until full payment on all unpaid amounts consisting of the principal and interest.

On Promissory Note No. PMRDC No. 97-12-333:

(A) The peso equivalent of the sum of DOLLARS: One Hundred Eighty Nine Thousand Four Hundred Eighteen and 75/100 (US$189,418.75) under PMRDC-97-12-333;

(B) Interest thereon at the stipulated rate of 17% per annum computed from 31 December 1997;

(C) A penalty of 3% per month computed from 03 November 1998 until full payment on all unpaid amounts consisting of the principal and interest.

2. Defendant Stronghold Insurance Company, Inc. is hereby held jointly and solidarily liable to plaintiff Mrs. Garon in the amount of PESOS: TWELVE MILLION SEVEN HUNDRED FIFTY FIVE THOUSAND ONE HUNDRED THIRTY NINE AND EIGHTY FIVE CENTAVOS (P12,755,139.85).

3. Defendants Project Movers Realty and Development Corporation and Stronghold Insurance Company, Inc. are also ordered to pay plaintiff Mrs. Garon jointly and severally the sum of PESOS: TWO HUNDRED THOUSAND as attorney’s fees plus costs of suit.

All other claims and counter-claims of the parties are hereby ordered dismissed.

SO ORDERED.5

On 6 October 2000, Garon filed a motion for execution pending appeal. On 10 October 2000, Stronghold Insurance moved for the reconsideration of the 19 September 2000 Order of the trial court.

In an Order6 dated 23 January 2001, the trial court denied Stronghold Insurance’s motion for reconsideration for lack of merit.

In an Order7 dated 8 February 2001, the trial court granted Garon’s motion for execution pending appeal. The trial court ordered Garon to post a bond of P20 million to answer for any damage that Project Movers and Stronghold Insurance may sustain by reason of the execution pending




appeal. On 14 February 2001, Branch Clerk of Court Richard C. Jamora ("Jamora") issued a writ of execution pending appeal.

On 16 February 2001, Stronghold Insurance filed a notice of appeal.

Stronghold Insurance also filed a petition for certiorari before the Court of Appeals to assail the trial court’s 8 February 2001 Order and the writ of execution pending appeal. In its Resolution8

of 23 February 2001, the Court of Appeals enjoined the trial court, Jamora and Garon from enforcing the 8 February 2001 Order. However, it turned out that notices of garnishment had been served before the Court of Appeals issued the temporary restraining order (TRO). In its Order9 dated 7 March 2001, the trial court denied Stronghold Insurance’s Urgent Motion for the recall of the notices of garnishment.

The Ruling of the Court of Appeals

In its 4 May 2001 Decision, the Court of Appeals dismissed the petition of Stronghold Insurance and lifted the TRO it issued.

The Court of Appeals sustained the trial court in issuing the writ of execution pending appeal on the ground of illness of Garon’s husband. Citing Articles 6810 and 19511 of the Family Code, the Court of Appeals held that while it was not Garon who was ill, Garon needed the money to support her husband’s medical expenses and to support her family.

Stronghold Insurance alleged that its liability is limited only to P12,755,139.85 in accordance with its surety bond with Project Movers, plus attorney’s fees of P200,000 as awarded by the trial court. However, the amount in the writ of execution pending appeal and notices of garnishment is P56 million. Nevertheless, the Court of Appeals ruled that Stronghold Insurance failed to show that more than P12,755,139.85 had been garnished.

Hence, the petition before this Court.

In its Resolution12 dated 8 August 2001, this Court issued a TRO to restrain and enjoin the enforcement of the 8 February 2001 Order and the writ of execution pending appeal until further orders from this Court.

The Issue

The sole issue is whether there are good reasons to justify execution pending appeal.

The Ruling of This Court

The petition has merit.

Requisites of Execution Pending Appeal






Execution pending appeal is governed by paragraph (a), Section 2, Rule 39 of the 1997 Rules of Civil Procedure ("Rules") which provides:

SEC. 2. Discretionary execution. -

(a) Execution of a judgment or final order pending appeal. - On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal.

After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court.

Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing.

x x x x

Execution pending appeal is an exception to the general rule. The Court explained the nature of execution pending appeal as follows:

Execution pending appeal is an extraordinary remedy, being more of the exception rather than the rule. This rule is strictly construed against the movant because courts look with disfavor upon any attempt to execute a judgment which has not acquired finality. Such execution affects the rights of the parties which are yet to be ascertained on appeal.13

The requisites for the grant of an execution of a judgment pending appeal are the following:

(a) there must be a motion by the prevailing party with notice to the adverse party;

(b) there must be good reasons for execution pending appeal;

(c) the good reasons must be stated in the special order.14

As a discretionary execution, execution pending appeal is permissible only when good reasons exist for immediately executing the judgment before finality or pending appeal or even before the expiration of the period to appeal.15 Good reasons, special, important, pressing reasons must exist to justify execution pending appeal; otherwise, instead of an instrument of solicitude and justice, it may well become a tool of oppression and inequality.16 Good reasons consist of exceptional circumstances of such urgency as to outweigh the injury or damage that the losing party may suffer should the appealed judgment be reversed later.17

Existence of Good Grounds to Justify Execution Pending Appeal

In this case, Garon anchors the motion for execution pending appeal on the following grounds:






(a) any appeal which Project Movers and Stronghold Insurance may take from the summary judgment would be patently dilatory;

(b) the ill health of Garon’s spouse and the spouses’ urgent need for the funds owed to them by Project Movers and Stronghold Insurance constitute good reasons for execution pending appeal; and

(c) Garon is ready and willing to post a bond to answer for any damage Project Movers and Stronghold Insurance may suffer should the trial court’s decision be reversed on appeal.18

In granting the motion for execution pending appeal, the trial court ruled:

A perusal of [t]he records of the instant case will sustain plaintiff’s claim that defendants raised no valid or meritorious defenses against the claims of plaintiff. The Court notes with interest the fact that defendants admitted the genuineness and due execution of the Promissory Notes and Surety Agreement sued upon in this case.

The instant case simply turns on the issues of (i) whether or not there was a valid, due and demandable obligation and (ii) whether or not the obligation had been extinguished in the manner provided for under our laws. The Answers of defendants contained admissions that the obligation was valid and subsisting and that the same was due and unpaid. Founded as it is on Promissory Notes and Surety Agreements, the authenticity and due execution of which had been admitted, the Court is convinced that plaintiff is entitled to a judgment in her favor and that any appeal therefrom will obviously be a ploy to delay the proceedings (See Home Insurance Company vs. Court of Appeals, 184 SCRA 318).

The second ground relied upon by plaintiff is also impressed with merit. In Ma-ao Sugar Central vs. Canete, 19 SCRA 646, the Supreme Court held that the movant was entitled to execution pending appeal of an award of compensation, ruling that his ill health and urgent need for the funds so awarded were considered "good reasons" to justify execution pending appeal (See also De Leon vs. Soriano, 95 Phil. 806).

It is established that plaintiff’s spouse, Mr. Robert Garon, suffers from coronary artery disease, benign Prostatic Hyperplasia and hyperlipidemia. He is undergoing continuous treatment for the foregoing ailments and has been constrained to make serious lifestyle changes, that he can no longer actively earn a living. As shown in plaintiff’s verified motion, she has urgent need of the funds owed to her by defendants in order to answer for her husband’s medical expenses and for the day-to-day support of the family considering her husband’s ill health. The Court therefore finds and holds that there exists good reasons warranting an execution pending appeal.19

The trial court ruled that an appeal from its 19 September 2000 Order is only a ploy to delay the proceedings of the case. However, the authority to determine whether an appeal is dilatory lies with the appellate court.20 The trial court’s assumption that the appeal is dilatory prematurely judges the merits of the main case on appeal.21 Thus:





Well-settled is the rule that it is not for the trial court to determine the merit of a decision it rendered as this is the role of the appellate Court. Hence, it is not within the competence of the trial court, in resolving the motion for execution pending appeal, to rule that the appeal is patently dilatory and to rely on the same as the basis for finding good reason to grant the motion.22

In a Decision23 promulgated on 7 May 2004 in CA-G.R. CV No. 69962 entitled "Emerita Garon v. Project Movers Realty and Development Corporation, et al.," the Court of Appeals sustained the trial court in rendering the summary judgment in Civil Case No. 99-1051. However, the Court of Appeals ruled that Stronghold Insurance could not be held solidarily liable with Project Movers. The Court of Appeals ruled that the surety bond between Project Movers and Stronghold Insurance expired on 7 November 1998 before the maturity of Project Movers’ loans on 17 December 1998 and 31 December 1998, respectively. Hence, when the loans matured, the liability of Stronghold Insurance had long ceased. The Court of Appeals affirmed the trial court’s 19 September 2000 Order with modification by ruling that Stronghold Insurance is not liable to Garon.

The 7 May 2004 Decision of the Court of Appeals is not yet final. It is the subject of a petition for review filed by Garon before this Court. The case, docketed as G.R. No. 166058, is still pending with this Court. While this Court may either affirm or reverse the 7 May 2004 Decision of the Court of Appeals, the fact that the Court of Appeals absolved Stronghold Insurance from liability to Garon shows that the appeal from the 19 September 2000 Order is not dilatory on the part of Stronghold Insurance.

We agree with Stronghold Insurance that Garon failed to present good reasons to justify execution pending appeal. The situations in the cases cited by the trial court are not similar to this case. In Ma-Ao Sugar Central Co., Inc. v. Cañete,24 Cañete filed an action for compensation for his illness. The Workmen’s Compensation Commission found the illness compensable. Considering Cañete’s physical condition and the Court’s finding that he was in constant danger of death, the Court allowed execution pending appeal. In De Leon, et al. v. Soriano, et al.,25 De Leon, et al. defaulted on an agreement that was peculiarly personal to Asuncion. The agreement was valid only during Asuncion’s lifetime. The Court considered that Soriano’s health was delicate and she was 75 years old at that time. Hence, execution pending appeal was justified. In this case, it was not Garon, but her husband, who was ill.

The posting of a bond, standing alone and absent the good reasons required under Section 2, Rule 39 of the Rules, is not enough to allow execution pending appeal. The mere filing of a bond by a successful party is not a good reason to justify execution pending appeal as a combination of circumstances is the dominant consideration which impels the grant of immediate execution.26

The bond is only an additional factor for the protection of the defendant’s creditor.27

The exercise of the power to grant or deny a motion for execution pending appeal is addressed to the sound discretion of the trial court.28 However, the existence of good reasons is indispensable to the grant of execution pending appeal.29 Here, Garon failed to advance good reasons that would justify the execution pending appeal.









Execution Pending Appeal against Stronghold InsuranceExceeds its Liability under the Trial Court’s Order

The dispositive portion of the trial court’s 19 September 2000 Order states:

WHEREFORE, premises considered[,] this Court hereby renders judgment in favor of the plaintiff Mrs. Emerita I. Garon as follows:

x x x x

2. Defendant Stronghold Insurance Company, Inc. is hereby held jointly and solidarily liable to plaintiff Mrs. Garon in the amount of PESOS: TWELVE MILLION SEVEN HUNDRED FIFTY FIVE THOUSAND ONE HUNDRED THIRTY NINE AND EIGHTY FIVE CENTAVOS (P12,755,139.85).

3. Defendants Project Movers Realty and Development Corporation and Stronghold Insurance Company, Inc. are also ordered to pay plaintiff Mrs. Garon jointly and severally the sum of PESOS: TWO HUNDRED THOUSAND as attorney’s fees plus costs of suit.

x x x x30

The writ of execution pending appeal issued against Project Movers and Stronghold Insurance is for P56 million.31 However, the Court of Appeals ruled that Stronghold Insurance failed to show that more than P12,755,139.85 had been garnished. The ruling of the Court of Appeals unduly burdens Stronghold Insurance because the amount garnished could exceed its liability. It gives the sheriff the discretion to garnish more than P12,755,139.85 from the accounts of Stronghold Insurance. The amount for garnishment is no longer ministerial on the part of the sheriff. This is not allowed. Thus:

Leaving to the Sheriff, as held by the Court of Appeals, the determination of the exact amount due under the Writ would be tantamount to vesting such officer with judicial powers. He would have to receive evidence to determine the exact amount owing. In his hands would be placed a broad discretion that can only lead to delay and open the door to possible abuse. The orderly administration of justice requires that the amount on execution be determined judicially and the duties of the Sheriff confined to purely ministerial ones.32

WHEREFORE, we SET ASIDE the 4 May 2001 Decision of the Court of Appeals in CA-G.R. SP No. 63334. We also SET ASIDE the 8 February 2001 Order of the Regional Trial Court of Makati City, Branch 56 and the writ of execution pending appeal issued on 14 February 2001. We make permanent the temporary restraining order we issued on 8 August 2001.

SO ORDERED.





FIRST DIVISION

G.R. No. 172852 January 30, 2013

CITY OF CEBU, Petitioner, vs.APOLONIO M. DEDAMO, JR., Respondent.

R E S O L U T I O N

REYES, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision1 dated November 30, 2005 of the Court of Appeals (CA) ordering petitioner City of Cebu (petitioner) to pay twelve percent (12%) legal interest per annum on the unpaid balance of the just compensation paid to respondent Apolonio Dedamo, Jr. (respondent). Likewise assailed is the Resolution2 dated May 9, 2006 denying reconsideration.

The ensuing facts are not disputed.3

The present controversy is an off-shoot of Civil Case No. CEB-14632 for eminent domain over two (2) parcels of land owned by spouses Apolonio and Blasa Dedamo (Spouses Dedamo), filed by the petitioner before the Regional Trial Court (RTC) of Cebu City, Branch 13, on September 17, 1993. The petitioner immediately took possession of the lots after depositing P51,156.00 with the Philippine National Bank pursuant to Section 19 of Republic Act No. 7160.4

During the pendency of the case, or on December 14, 1994, the petitioner and Spouses Dedamo entered into a Compromise Agreement whereby the latter agreed to part with the ownership of the parcels of land in favor of the former in consideration of ONE MILLION SEVEN HUNDRED EIGHTY-SIX THOUSAND FOUR HUNDRED PESOS (P1,786,400.00) as provisional payment and just compensation in an amount to be determined by a panel of commissioners.

Forthwith, the panel was constituted and a report was submitted to the RTC recommending the sum of P20,826,339.50 as just compensation. The report was adopted and approved by the RTC in its Order dated December 27, 1996.5

http://www.lawphil.net/judjuris/juri2013/jan2013/gr_172852_2013.html#fnt5





The RTC Order was affirmed by the CA and then by the Court, in a Decision dated May 7, 2002, when the matter was elevated for review in a petition docketed as G.R. No. 142971.

When the said decision became final and executory on September 20, 2002, the case was remanded for execution to the RTC, before which, a motion for the issuance of a writ of execution was filed by Spouses Dedamo on April 4, 2003. On May 16, 2003, the RTC granted the motion and ordered the issuance of the writ.

In the meantime, Spouses Dedamo passed away and they were substituted in the case by herein respondent.

On December 23, 2003, the petitioner paid the respondent the sum of P19,039,939.50 which is the difference between the just compensation due and the provisional payment already made.

On March 24, 2004, the respondent filed a Manifestation and Motion before the RTC to order the petitioner to pay interest on the just compensation computed from the time of actual taking of the lands.

On April 30, 2004, the RTC denied the motion and ruled that it can no longer amend a final and executory judgment that did not specifically direct the payment of legal interest. Adamant, the respondent sought recourse before the CA asserting that the petitioner is liable to pay: (a) 12% legal interest on the unpaid balance of the just compensation computed from the time of actual taking of the property up to the date of payment of just compensation; and (b) 12% legal interest from the time the decision awarding just compensation became final and executory on September 20, 2002 until its satisfaction on December 23, 2003.

The Ruling of the CA

In its Decision dated November 30, 2005, the CA rejected the respondent’s first claim since the issue was belatedly raised during the execution stage and after the judgment of just compensation attained finality.

Nonetheless, the CA found the respondent’s second contention meritorious. The CA awarded legal interest accruing from the time the RTC Order dated December 27, 1996 awarding just compensation was affirmed with finality by the Supreme Court up to the time of full payment thereof in line with the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals6 that when a court judgment awarding a sum of money becomes final and executory, it shall earn legal interest of 12% per annum reckoned from such finality until satisfaction.

Accordingly, the decretal portion of the decision reads:

WHEREFORE, in view of the foregoing, the instant petition is partially GRANTED in that the resolution dated April 30, 2004 is MODIFIED to GRANT payment of legal interest of 12% per annum reckoned from the date of finality of the decision of the Supreme Court on May 2, 2002 up to the time full payment for the just compensation shall have been made.


No pronouncement as to cost.

SO ORDERED.7

The CA effectively reiterated the above decision when it denied8 the petitioner’s motion for reconsideration thereof. Both parties elevated the CA judgment to the Court. The respondent’s petition was docketed as G.R. No. 172942 where he sought, in the main, that the 12% interest rate be reckoned from the date of taking of the property and not from the date of finality of the Decision dated May 7, 2002 in G.R. No. 142971. The Court denied his petition on August 22, 2006 for failure to sufficiently show that the CA committed any reversible error in the questioned judgment. The respondent’s motion for reconsideration of the said decision was denied with finality on November 27, 2006.9

At bar is the recourse interposed by the petitioner wherein he seeks the setting aside of the same CA Decision dated November 30, 2005.

On October 20, 2006, the respondent moved for the consolidation of the present petition with G.R. No. 172942.10 The motion was denied in view of the prior denial of G.R. No. 172942 on August 22, 2006.11

In the case at bar, the petitioner prays for the annulment of the award of 12% legal interest made by the CA in view of the termination of the eminent domain case upon payment of the just compensation in satisfaction of the writ of execution. The petitioner further asserts that the final judgment in Civil Case No. CEB-14632 which did not explicitly pronounce the payment of interest can no longer be modified lest the basic principles of remedial law be defiled.12

For his part, the respondent avers13 that Section 10, Rule 67 of the Rules of Court mandating the payment of legal interest on just compensation forms part of every judgment rendered in eminent domain cases even if the same was not directly ordered therein.

The respondent also claims that the award of just compensation must be reckoned from the date of taking of subject lots and not from the date of finality of G.R. No. 142971 because just compensation, before it is paid, constitutes loan or forbearance of money that entails the imposition of a 12% interest per annum.

Ruling of the Court

The petition is denied on the ground of res judicata in the mode of conclusiveness of judgment.

A perusal of the allegations in the present case evidently shows that the petitioner broaches the issues similarly raised and already resolved in G.R. No. 172942.

Under the principle of conclusiveness of judgment, when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or when an opportunity for such trial has been given, the judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and those in privity with them.14 Stated differently, conclusiveness of judgment









bars the re-litigation in a second case of a fact or question already settled in a previous case.151âwphi1

The adjudication in G.R. No. 172942 has become binding and conclusive on the petitioner who can no longer question the respondent’s entitlement to the 12% legal interest awarded by the CA. The Court’s determination in G.R. No. 172942 on the reckoning point of the 12% legal interest is likewise binding on the petitioner who cannot re-litigate the said matter anew through the present recourse.

Thus, the judgment in G.R. No. 172942 bars the present case as the relief sought in the latter is inextricably related to the ruling in the former.

WHEREFORE, premises considered, the Petition is hereby DENIED.

SO ORDERED.


cases rem 23-38

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