civpro case set 3

7/29/2019 CivPro Case Set 3

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Civil Procedure Case Set 3

New Era University College of Law

PERRAL

Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISION

G .R . No. 7490 3 M ar ch 21, 19 89HON. PERFECTO A.S. LAGUIO, JR., Presiding Judge ofMetropolitan Trial Court of Quezon City, Branch XXXIX(formerly Br. IX), CITY SHERIFF OF QUEZON CITY ThruGUILLERMO M. LANSANG and/or his substitute, and EFRENNANG TO DY, petitioners,vs.CATALINO GAMET, SOFIA REDOLOZA, DOMINGO TUBEO,AGUSTIN GAMET, BENJAMIN AMANSEC & VICENTELEONARDO, and HON. RODOLFO A. ORTIZ, as PresidingJudge of Regional Trial Court of Quezon City, BranchLXXXIX, respondents.

Noblejas, Sorreta & Associates for petitioners.

Urbina & Associates Law Office for private respondents.

PARAS, J.:

The instant petition for review stemmed from an action forunlawful detainer, commenced on June 7, 1979 by EvangelinaQuiambao before the Municipal Trial Court of Quezon City,Branch 39, against some forty-five (45) defendants who wereallegedly illegally occupying her land located at No. 24 GeneralLim Street, San Francisco del Monte, Quezon City. The case wasdocketed as Civil Case No. 35511.

Of the forty-five (45) defendants

a) 5 were declared in de faul t, and evidence againstthem was presented ex parte (TSN, 10- 17-79; formal offer ofevidence, 4-26-85);

b) 15 entered i nt o a comp romise agreement w ithoriginal plaintiff Evangelina Quiambao whereby the latter agreedto sell the subject land to them in the terms and conditions, setforth in the DECISION of the MTC Court (Annex B of Petitioner); .

c) 15, whi le f il ing an answer to the compla int, d id notappear during the trial despite notice, for which reason plaintiffsevidence was deemed presented ex parte as against them;

'(1) admitting plaintiffs ownership over the subject land;but

(2) a lleg ing tha t they have been in occupat ion andpossession of a small portion of the lots in question for more than

10 years; that they constructed their houses within the subject

lot with the consent of plaintiff who collected and received therentals due up to the present; that there is no real necessity forthe plaintiff to repossess the lots in question and for her to ejectthem, as they are in dire need of a house to pursue a means oflivelihood in Manila;

and as they refused to sign the compromise agreement, adverted

to above, they called themselves as the 'non-compromisingdefendants.' (p. 151, Rollo)

Meanwhile, Evangelina Quiambao conveyed all her rights andinterest on subject parcel of land to herein petitioner Efren NangTo Dy, who thereafter substituted her as party-plaintiff.

Insofar as the so-called non-compromising defendants wereconcerned, petitioner filed on May 28, 1985 a Motion forSummary Judgment under Rule 34 of the Revised Rules of Court.

Acting on the said motion, the Municipal Trial Court rendered itsdecision on August 15, 1985, approving the compromiseagreement executed by and between the plaintiff and the sixteen(16) defendants and ordering the ejectment from the subjectland of the other twenty nine (29) defendants plus one Vicente

Leonardo. The dispositive portion of the decision reads, viz:

WHEREFORE, judgment is hereby rendered ordering thedefendants, namely, Emilia Vizamanos, Nenita Sarit ,Lolita deVera, Rogelio Rico, Eduvigio Castro, Daniel Abulencia, FlorencioAlberto, Benigno Angele s, Lolita Angeles, Juanita Carpio, O rlandoCesar, Angelina Cheng, Lydia Cruz, Melchor Diocera, Perla Dona,Jose Gamet, Lilia Gamet, Florentina Hebron, Jose Mata, RogelioPonce, Catalino Gamet, Esteban Rabago, Benjamin Amansec,Domingo Tubeo, Sofia Redoloza, Federico Ponce, Agustin Gamet,Petrocinio Gamet and Gregorio Dona, plus one Vicente Leonardo(who does not appear as a party-defendant in the complaint, butwho has been represented in these proceedings by Atty. EvaristoUrbina as counsel for the last named 10 defendants), and allpersons claiming right under them, to vacate plaintiffs landlocated at No. 24 General Lim Street, San Francisco del Monte,Quezon City, and to demolish and remove their houses andwhatever constructions they have made thereon; to pay theplaintiff their respective accrued reasonable monthly rents on thepremises from June 7, 1979, computed at P100.00 each, amonth, until the defendants shall have vacated the premisesbeing respectively occupied by them with interest thereof at thelegal rate of 12% per annum from today until the amount shallhave been fully paid and an additional sum of P5,000.00, as andfor attorney's fees, plus the costs of this suit.

SO ORDERED. (pp. 3-4, Memorandum for the Respondents; pp.175-176, Rollo)

Invoking Sec. 8, Rule 70 of the Rules of Court, petitioner, as thethen plaintiff, filed a motion for execution.

Instead of appealing, the non-compromising defendants thru

Atty. Urbina filed a Motion for Reconsideration, which petitioner

moved to strike out as being a "prohibited pleading" under theRule on Summary Procedure.

In an Order dated September 20, 1985, the Municipal Trial Courtordered (a) the motion for reconsideration striken out from therecord and (b) the issuance of a writ of execution.

Atty. Urbina filed a Notice of Appeal but upon petitioner's motion,on the ground that since the motion for reconsideration did notstop the running of the reglementary period for appeal and thattherefore the decision has already become final and executory,the Municipal Trial Court ordered the dismissal of the notice ofappeal in its Order dated October 16, 1985.

Against the aforesaid Orders dated September 20, 1985, andOctober 16, 1985, Atty. Urbina filed a petition for certiorari andmandamus with the Regional Trial Court of Quezon City. Thecase was docketed as Civil Case No. Q-46541, assigned to BranchLXXXIX thereof, presided over by respondent Judge RodolfoOrtiz.

On June 6, 1986, respondent Judge Ortiz rendered his nowassailed decision, the dispositive portion of which reads

ACCORDINGLY, judgment is hereby rendered nullifying the orderof respondent judge, in Civil Case No. 35511 dated September20, 1985 which ordered the issuance of a writ of execution andhis order dated October 16, 1985 which dismissed petitioners'notice of appeal, ordering thereby respondent judge to give duecourse to the appeal of the petitioners filed on September 25,1985, and to forward consequent thereto the entire originalrecords of Civil Case No. 35511 to the Regional Trial Court ofQuezon City for further proceedings, with costs against theprivate respondent. The preliminary injunction issued onDecember 10, 1985, is made permanent.

SO ORDERED. (p. 7, Annex A of Petition; p. 26, Rollo)

The rationale of the said decision is that, since Judge Laguio Jr.of the Municipal Trial Court rendered the Summary Judgment onthe basis of Rule 34 of the Revised Rules of Court, it stand toreason that defendants, (herein private respondents) adverselyaffected by said summary judgment must seek, as they did,reliefs and remedies under the same Revised Rules of Court.

Petitioners now question the above ruling of respondent JudgeOrtiz. While they never disputed the fact the Summary Judgmentof the Metropolitan Trial Court was indeed rendered on the basisof Rule 34 of the Revised Rules of Court, they neverthelessmaintain that the Rules on Summary Procedure must be appliedon the private respondent's Motion for Reconsideration if only totreat the same as a prohibited pleading under Sec. 15(c) of thesaid Rule 7 on Summary Procedure and consequently theSummary Judgment sought to be appealed became final andexecutory.

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It is a matter of record that when this case was filed in 1979, theRules on Summary Procedure was not yet a law. This took effectonly on August 1, 1983. Thus, Judge Laguio, Jr. of theMetropolitan Trial Court tried the case on the merits with thepresentation of one witness in the person of the original plaintiff,Evangelina Quiambao. Then, on a motion for Summary Judgmentfiled by herein petitioner who substituted Evangelina Quiambao

as party plaintiff, Judge Laguio Jr. rendered a SummaryJudgment on August 15, 1985. All these proceedings were donepursuant to the provisions of the Revised Rules of Court. It is tobe noted that under these rules a motion for reconsideration isallowed and this will toll the running of the period for appeal. So,when private respondents filed their motion for reconsiderationon August 26, 1985 or eleven (11) days from receipt of a copy ofthe decision, the period for appeal was interrupted. Their appeal,therefore, filed on September 25, 1985 (the very same day theyreceived the notice of the denial of their motion forreconsideration) was filed well within the period to appeal.

But, Judge Laguio Jr. did not apply the Revised Rules of Courtwhich allows a motion for reconsideration. Instead, he appliedthe Rule on Summary Procedure which prohibits Motion for NewTrial, or for reconsideration or for re-opening of trial.

This question therefore, arises: Is the rule on SummaryProcedure applicable to cases filed prior to the date of itseffectivity on August 1, 1983 and still pending on that date?

As a general rule, new Rules of Court on procedure apply topending cases (People vs. Sumilang, 77 Phil. 764). Beingprocedural in nature, those provisions may be appliedretroactively. (Executive Order No. 864, dated January 17, 1983cited in Alday vs. Camilon 120 SCRA 522)

The specific dimensions of the matter, however, may be graspedwith the assistance of the Rules of Court, Rule 144 thereof, thelast rule entitled "Effectiveness" reading as follows:

These Rules shall take effect on January 1, 1964. They shallgovern all cases brought after they take effect and also all furtherproceedings in cases then pending, except to the extent that inthe opinion of the court their application would not be feasible orwould work injustice, in which event the former procedure shallapply.

The foregoing text except for the date mentioned therein hasbeen reproduced in toto from the last rule of the 1940 Rules ofCourt, more specifically, Rule 133 thereof.

Going by the above-quoted provision which is in pari-materia newcourt rules apply to pending cases only with reference toproceedings therein which take place after the date of theireffectivity. (Pacho vs. Uy Tioco, 9 Phil. 123) They do not apply"to the extent that in the opinion of the court their applicationwould not be feasible or would work injustice in which event theformer procedure shall apply."

In the case at bar, the application of the rule on SummaryProcedure will work injustice to the private respondents, becauseit will mean the dismissal of their appeal. The interest of justicewill be better served if private respondents will be allowed topursue their appeal. After all, the procedure they have availed ofwas allowed under the Revised Rules of Court.

Also, the application of the said rule on Summary Procedure isnot feasible. Before summary procedure could be applied toparties-litigants, prior notice to the latter to that effect should bemade, as mandated by the provisions of Section 3 of the Rules onSummary Procedure, to wit:

Sec. 3. Duty of the Court upon filing of complaint. Uponthe filing of the complaint, the court, from a consideration of theallegations thereof:

a) May d ismiss t he c ase o utright d ue t o lack o f jurisdiction, improper venue, failure to state a cause of action, orfor any other valid ground for the dismissal of a civil action; or

b) if a dismissal is not ordered, shall make adetermination whether the case falls under summary procedure.

In the affirmative case, the summons must STATE that thesummary procedure under this Rule shall apply. (capitalizationsupplied)

Clearly then, the rule requires prior notice to the parties of itsapplication which notice must be contained in the summons dulyserved to them. In this case no such notice was made.

In view of all the foregoing, the petition is DISMISSED.

SO ORDERED.

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PERRAL

Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISION

G.R. No. 138822 January 23, 2001EVANGELINE ALDAY, petitioner,vs.FGU INSURANCE CORPORATION, respondent.

GONZAGA-REYES, J.:

On 5 May 1989, respondent FGU Insurance Corporation filed acomplaint with the Regional Trial Court of Makati1 alleging thatpetitioner Evangeline K. Alday owed it P114,650.76, representingunliquidated cash advances, unremitted costs of premiums andother charges incurred by petitioner in the course of her work asan insurance agent for respondent.2 Respondent also prayed forexemplary damages, attorney's fees, and costs of suit.3 Petitionerfiled her answer and by way of counterclaim, asserted her rightfor the payment of P104,893.45, representing direct

commissions, profit commissions and contingent bonuses earnedfrom 1 July 1986 to 7 December 1986, and for accumulatedpremium reserves amounting to P500,000.00. In addition,petitioner prayed for attorney's fees, litigation expenses, moraldamages and exemplary damages for the allegedly unfoundedaction filed by respondent.4 On 23 August 1989, respondent fileda "Motion to Strike Out Answer With Compulsory CounterclaimAnd To Declare Defendant In Default" because petitioner'sanswer was allegedly filed out of time.5 However, the trial courtdenied the motion on 25 August 1989 and similarly rejectedrespondent's motion for reconsideration on 12 March 1990.6 Afew weeks later, on 11 April 1990, respondent filed a motion todismiss petitioner's counterclaim, contending that the trial courtnever acquired jurisdiction over the same because of the non-payment of docket fees by petitoner.7 In response, petitionerasked the trial court to declare her counterclaim as exempt frompayment of docket fees since it is compulsory and that

respondent be declared in default for having failed to answersuch counterclaim.8

In its 18 September 1990 Order, the trial court9 grantedrespondent's motion to dismiss petitioner's counterclaim andconsequently, denied petitioner's motion. The court foundpetitioner's counterclaim to be merely permissive in nature andheld that petitioner's failure to pay docket fees prevented thecourt from acquiring jurisdiction over the same.10 The trial courtsimilar denied petitioner's motion for reconsideration on 28February 1991.1wphi1.nt

On 23 December 1998, the Court of Appeals11 sustained the trialcourt, finding that petitioner's own admissions, as contained inher answer, show that her counterclaim is merely permissive. Therelevant portion of the appellate court's decision12 is quoted

herewith -

Contrary to the protestations of appellant, mere reading of theallegations in the answer a quo will readily show that hercounterclaim can in no way be compulsory. Take note of thefollowing numbered paragraphs in her answer:

"(14) That, indeed, FGU's cause of action which is not supported

by any document other than the self-serving 'Statement ofAccount' dated March 28, 1988 x x x

(15) That it should be noted that the cause of action of FGU isnot the enforcement of the Special Agent's Contract but thealleged 'cash accountabilities which are not based on writtenagreement x x x.

x x x x

(19) x x x A careful analysis of FGU's three-page complaint willshow that its cause of action is not for specific performance orenforcement of the Special Agent's Contract rather, it is for thepayment of the alleged cash accountabilities incurred bydefendant during the period form [sic] 1975 to 1986 which claimis executory and has not been ratified. It is the established rule

that unenforceable contracts, like this purported money claim ofFGU, cannot be sued upon or enforced unless ratified, thus it isas if they have no effect. x x x."

To support the heading "Compulsory Counterclaim" in her answerand give the impression that the counterclaim is compulsoryappellant alleged that "FGU has unjustifiably failed to remit todefendant despite repeated demands in gross violation of theirSpecial Agent's Contract x x x." The reference to said contractwas included purposely to mislead. While on one hand appellantalleged that appellee's cause of action had nothing to do with theSpecial Agent's Contract, on the other hand, she claim that FGUviolated said contract which gives rise of [sic] her cause of action.Clearly, appellant's cash accountabilities cannot be the offshoot ofappellee's alleged violation of the aforesaid contract.

On 19 May 1999, the appellate court denied petitioner's motion

for reconsideration,13 giving rise to the present petition.

Before going into the substantive issues, the Court shall firstdispose of some procedural matters raised by the parties.Petitioner claims that respondent is estopped from questioningher non-payment of docket fees because it did not raise thisparticular issue when it filed its motion - the "Motion to Strike outAnswer With Compulsory Counterclaim And To Declare DefendantIn Default" - with the trial court; rather, it was only nine monthsafter receiving petitioner's answer that respondent assailed thetrial court's lack of jurisdiction over petitioner's counterclaimsbased on the latter's failure to pay docket fees.14 Petitioner'sposition is unmeritorious. Estoppel by laches arises from thenegligence or omission to assert a right within a reasonable time,warranting a presumption that the party entitled to assert iteither has abandoned or declined to assert it.15 In the case at

bar, respondent cannot be considered as estopped from assailing

the trial court's jurisdiction over petitioner's counterclaim sincethis issue was raised by respondent with the trial court itself - thebody where the action is pending - even before the presentationof any evidence by the parties and definitely, way before anyjudgment could be rendered by the t rial court.

Meanwhile, respondent questions the jurisdiction of the Court of

Appeals over the appeal filed by petitioner from the 18September 1990 and 28 February 1991 orders of the trial court.It is significant to note that this objection to the appellate court'sjurisdiction is raised for the first time before this Court;respondent never having raised this issue before the appellatecourt. Although the lack of jurisdiction of a court may be raised atany stage of the action, a party may be estopped from raisingsuch questions if he has actively taken part in the veryproceedings which he questions, belatedly objecting to thecourt's jurisdiction in the event that the judgment or ordersubsequently rendered is adverse to him.16 In this case,respondent actively took part in the proceedings before the Courtof Appeals by filing its appellee's brief with the same.17 Itsparticipation, when taken together with its failure to object to theappellate court's jurisdiction during the entire duration of theproceedings before such court, demonstrates a willingness to

abide by the resolution of the case by such tribunal andaccordingly, respondent is now most decidedly estopped fromobjecting to the Court of Appeals' assumption of jurisdiction overpetitioner's appeal.18

The basic issue for resolution in this case is whether or not thecounterclaim of petitioner is compulsory or permissive in nature.A compulsory counterclaim is one which, being cogn izable by theregular courts of justice, arises out of or is connected with thetransaction or occurrence constituting the subject matter of theopposing party's claim and does not require for its adjudicationthe presence of third parties of whom the court cannot acquirejurisdiction.19

In Valencia v. Court of Appeals,20 this Court capsulized thecriteria or tests that may be used in determining whether acounterclaim is compulsory or permissive, summarized as follows:

1. Are the issues of fact and law raised by the claim andcounterclaim largely the same?

2. Would res judicata bar a subsequent suit on defendant's claimabsent the compulsory counterclaim rule?

3. Will substantially the same evidence support or refuteplaintiff's claim as well s defendant's counterclaim?

4. Is there any logical relation between the claim and thecounterclaim?

Another test, applied in the more recent case of Quintanilla v.Court of Appeals,21 is the "compelling test of compulsoriness"which requires "a logical relationship between the claim and

counterclaim, that is, where conducting separate trials of the

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respective claims of the parties would entail a substantialduplication of effort and time by the parties and the court."

As contained in her answer, petitioner's counterclaims are asfollows:

(20) That defendant incorporates and repleads by reference all

the foregoing allegations as may be material to her Counterclaimagainst FGU.

(21) That FGU is liable to pay the following just, valid andlegitimate claims of defendant:

(a) the sum of at least P104,893.45 plus maximum interestthereon representing, among others, direct commissions, profitcommissions and contingent bonuses legally due to defendant;and

(b) the minimum amount of P500,000.00 plus the maximumallowable interest representing defendant's accumulated premiumreserve for 1985 and previous years,

which FGU has unjustifiably failed to remit to defendant despite

repeated demands in gross violation of their Special Agent'sContract and in contravention of the principle of law that "everyperson must, in the exercise of his rights and in the performanceof his duties, act with justice, give everyone his due, and observehonesty and good faith."

(22) That as a result of the filing of this patently baseless,malicious and unjustified Complaint, and FGU's unlawful, illegaland vindictive termination of their Special Agent's Contract,defendant was unnecessarily dragged into this litigation and todefense [sic] her side and assert her rights and claims againstFGU, she was compelled to hire the services of counsel withwhom she agreed to pay the amount of P30,000.00 as and forattorney's fees and stands to incur litigation expenses in theamount estimated to at least P20,000.00 and for which FGUshould be assessed and made liable to pay defendant.

(23) That considering further the malicious and unwarrantedaction of defendant in filing this grossly unfounded action,defendant has suffered and continues to suffer from seriousanxiety, mental anguish, fright and humiliation. In addition tothis, defendant's name, good reputation and business standing inthe insurance business as well as in the community have beenbesmirched and for which FGU should be adjudged and madeliable to pay moral damages to defendant in the amount ofP300,000.00 as minimum.

(24) That in order to discourage the filing of groundless andmalicious suits like FGU's Complaint, and by way of serving [as]an example for the public good, FGU should be penalized andassessed exemplary damages in the sum of P100,000.00 or suchamount as the Honorable Court may deem warranted under thecircumstances.22

Tested against the abovementioned standards, petitioner'scounterclaim for commissions, bonuses, and accumulatedpremium reserves is merely permissive. The evidence required toprove petitioner's claims differs from that needed to establishrespondent's demands for the recovery of cash accountabilitiesfrom petitioner, such as cash advances and costs of premiums.The recovery of respondent's claims is not contingent or

dependent upon establishing petitioner's counterclaim, such thatconducting separate trials will not result in the substantialduplication of the time and effort of the court and the parties.One would search the records in vain for a logical connectionbetween the parties' claims. This conclusion is further reinforcedby petitioner's own admissions since she declared in her answerthat respondent's cause of action, unlike her own, was not basedupon the Special Agent's Contract.23 However, petitioner's claimsfor damages, allegedly suffered as a result of the filing byrespondent of its complaint, are compulsory.24

There is no need for need for petitioner to pay docket fees forher compulsory counterclaim.25 On the other hand, in order forthe trial court to acquire jurisdiction over her permissivecounterclaim, petitioner is bound to pay the prescribed docketfees.26 The rule on the payment of filing fees has been laid down

by the Court in the case of Sun Insurance Office, Ltd. V. Hon.Maximiano Asuncion27-

1. It is not simply the filing of the complaint or appropriateinitiatory pleading, but the payment of the prescribed docket fee,that vests a trial court with jurisdiction over the subject-matter ornature of the action. Where the filing of the initiatory pleading isnot accompanied by payment of the docket fee, the court mayallow payment of the fee within a reasonable time but in no casebeyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-partyclaims and similar pleadings, which shall not be considered fileduntil and unless the filing fee prescribed therefor is paid. Thecourt may allow payment of said fee within a reasonable time butalso in no case beyond its applicable prescriptive or reglementaryperiod.

3. Where the trial court acquires jurisdiction over a claim by thefiling of the appropriate pleading and payment of the prescribedfiling fee but, subsequently, the judgment awards a claim notspecified in the pleading, or if specified the same has been leftfor determination by the court, the additional filing fee thereforshall constitute a lien on the judgment. It shall be theresponsibility of the Clerk of Court or his duly authorized deputyto enforce said lien and assess and collect the additional fee.

The above mentioned ruling in Sun Insurance has been reiteratedin the recent case of Susan v. Court of Appeals.28 In Suson, theCourt explained that although the payment of the prescribeddocket fees is a jurisdictional requirement, its non-payment doesnot result in the automatic dismissal of the case provided thedocket fees are paid within the applicable prescriptive or

reglementary period. Coming now to the case at bar, it has not

been alleged by respondent and there is nothing in the records toshow that petitioner has attempted to evade the payment of theproper docket fees for her permissive counterclaim. As a matterof fact, after respondent filed its motion to dismiss petitioner'scounterclaim based on her failure to pay docket fees, petitionerimmediately filed a motion with the trial court, asking it to declareher counterclaim as compulsory in nature and therefore exempt

from docket fees and, in addition, to declare that respondent wasin default for its failure to answer her counterclaim.29 However,the trial court dismissed petitioner's counterclaim. Pursuant tothis Court's ruling in Sun Insurance, the trial court should haveinstead given petitioner a reasonable time, but in no case beyondthe applicable prescriptive or reglementary period, to pay thefiling fees for her permissive counterclaim.

Petitioner asserts that the trial court should have declaredrespondent in default for having failed to answer hercounterclaim.30 Insofar as the permissive counterclaim ofpetitioner is concerned, there is obviously no need to file ananswer until petitioner has paid the prescribed docket fees foronly then shall the court acquire jurisdiction over such claim.31Meanwhile, the compulsory counterclaim of petitioner fordamages based on the filing by respondent of an allegedly

unfounded and malicious suit need not be answered since it isinseparable from the claims of respondent. If respondent were toanswer the compulsory counterclaim of petitioner, it wouldmerely result in the former pleading the same facts raised in itscomplaint.32

WHEREFORE, the assailed Decision of the Court of Appealspromulgated on 23 December 1998 and its 19 May 1999Resolution are hereby MODIFIED. The compulsory counterclaimof petitioner for damages filed in Civil Case No. 89-3816 isordered REINSTATED. Meanwhile, the Regional Trial Court ofMakati (Branch 134) is ordered to require petitioner to pay theprescribed docket fees for her permissive counterclaim (directcommissions, profit commissions, contingent bonuses andaccumulated premium reserves), after ascertaining that theapplicable prescriptive period has not yet set in.33

SO ORDERED.

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PERRAL

Republic of the PhilippinesSUPREME COURTManilaEN BANC

G.R. No. L-25889 January 17, 1973HON. GUILLERMO E. TORRES, as Presiding Judge of theCourt of First Instance of Rizal, Branch VIII, THEPROVINCIAL SHERIFF OF THE PROVINCE OF RIZAL, JAIMEE. LAICO and LUZ LOS BANOS-LAICO, petitioners-appellants,vs.HON. COURT OF APPEALS, JOSE CHIVI and ANGELINACHIVI as representative of the deceased MARTA B. CHIVI,respondents-appellees. Ernesto J. Seva for petitioners-appellants.

Ordonez, Cervo and Sanchez for respondents-appellees.

MAKALINTAL, J.:

Appeal by certiorari to review the decision of the Court of Appealsin CA-G.R. No. 35677-R, dated 31 August 1965.

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

On 1 January 1955 the spouses Isidro Sierra and AntoniaMagtaas sold a parcel of land to Marta B. Chivi, representing toher that the land was not registered either under the LandRegistration Act or under the Spanish Mortgage Law and assuringher that although the land was covered by a pre-war free patentapplication, the application had not been approved and no patenthad been issued. The Sierras made that assurance because Chiviwas not willing to buy the land if it was covered by a patent,since it would then be subject to repurchase. They agreed thatthe purchase price of P10,800.00 was not to be fully paid untilthe vendors could have the land registered under Act 496.

At the instance of the Sierras, Chivi filed an application forregistration of the land in the Court of First Instance of Rizal.While the application was pending Chivi, on 24 May 1958, soldher rights and interests in the land to the herein petitioners-spouses Jaime Laico and Luz Los Banos for P25,647.00, with thestipulation that should Chivi fail to secure and transfer title to theLaicos she would return to them twice the amount of theaforesaid purchase price. To induce the Laicos to buy Chivisrights and interests, the Sierras showed them a petitionwithdrawing their free patent application. The Laicos thereuponcontinued with the registration proceeding in substitution ofChivi, who signed a deed of transfer of her rights.

In December, 1959 the Laicos discovered, and in January, 1960Chivi learned, that a free patent title had been previously issued

to Isidro Sierra as early as 26 February 1932. The Laicos went to

see the Sierras, who agree to execute, as they did execute onJanuary 17, 1960, another deed of sale in favor of the Laicos.The Laicos then withdrew their application for registration andfiled instead a petition for the reconstitution of the title issued toIsidro Sierra.

On 14 June 1960, however, the Sierras filed a complaint against

Marta B. Chivi, assisted by her husband, and the Laicos in theCourt of First Instance of Rizal, docketed as Civil Case No. 6184,praying that they (plaintiffs) be allowed to repurchase the landunder the provisions of the Public Land Act. The Chivis and theLaicos filed their answers to the complaint and counter-claimedfor damages by reason of the alleged bad faith,misrepresentation and fraudulent acts of the Sierras, as hereinbefore recounted. The Laicos filed a cross-claim against theChivis for collection of twice the amount of the price paid undertheir sales contract for the latter's failure to deliver title to theLaicos, alleging that "the defendants Chivi are/or will be liable onthese warranties and condition should the plaintiffs finally obtainfavorable judgment in their favor" (sic).

On 12 March 1964 the Sierras and the Laicos entered into acompromise to amicably settle Civil Case No. 6184 as between

themselves, stipulating therein, among other things, that theLaicos were now the absolute owners of the land and that theSierras would withdraw their objection to the reconstitution of thepatent title and that said title would be transferred in the name ofthe Laicos, who would pay P10,000.00 to the Sierras; that theSierras would ask for the dismissal of Civil Case No. 6184 insofaras the Laicos were concerned and would convert their action inthe case from one for repurchase to one for collection of thebalance of the sales price and of damages against the Chivis; thatthe Laicos would pursue their cross-claim against the Chivis andin the event they obtained a favorable judgment thereon theywould pay to the Sierras one-half (1/2) of any amount awardedto them in excess of the purchase price of P25,647.00.

The compromise, which was executed without the knowledge ofor notice to the Chivis, was approved by the trial court on 12March 1964. On the same date the court, joint motion of the

Sierras and the Laicos, dismissed witness prejudice the complaintin Civil Case No. 6184 insofar as the Laicos were concerned aswell as the counter-claim of the Laicos against the Sierras. Chiviwas not notified of the dismissal.

The court set the case for pre-trial on 14 July 1964. Despitenotice to the Sierras and the Chivis, only cross-claimant JaimeLaico and his counsel appeared, whereupon the court declaredthe Chivis in default and allowed Laico to present evidence on thecross-claim before the deputy clerk of court. Counsel for theChivis filed an urgent motion for reconsideration, explaining whyhe failed to appear at the pre-trial, but the motion was denied.On 5 February 1965 the court rendered judgment for the Laicos,sentencing the cross-defendants to pay them a total amount ofP15,000.00, plus costs, and on 1 April 1965 issued a writ ofexecution. Pursuant to the writ the sheriff levied upon the

properties of the Chivis and issued a notice that the propertieswould be sold at public auction on 14 April 1965.

In due time the Chivis filed with the Court of Appeal a petition forcertiorari and prohibition with preliminary injunction to annul: (1)the order of the trial court authorizing the Laicos to adduceevidence ex parte on their cross-claim against Marta B. Chivi; (2)

the decision rendered on said cross-claim; and (3) the orderdirecting the issuance of a writ of execution, the levy onexecution and the notice of execution sale of the properties ofChivi prayed further that the therein respondents be prohibitedfrom conducting any further proceedings in said Civil Case No.6184 on the ground that the trial court was without jurisdiction inthe premises.

Upon giving due course to the petition the Court of Appealsissued a writ of preliminary injunction, restraining the thereinrespondents from proceedings with the execution and with thesale at public auction set for 14 April 1965, until further order.

On 31 August 1965 the Court of Appeals rendered decisiondeclaring null and void all the proceedings on the cross-claim ofthe spouses Laico against Chivi, as well as the orders, decisions,

writs and processes issued in connection therewith, andrestraining the therein respondent Judge and sheriff of the Courtof First Instance of Rizal from further proceeding in Civil Case No.6184. The Laicos moved for reconsideration. Pending resolutionof the motion for reconsideration, Marta B. Chivi died wassubstituted by Angelina Chivi. In an order dated 16 March 1966,the motion for reconsideration was denied. Hence, the instantappeal by certiorari brought by the Laicos.

The principal issue in this case is: Could the cross-claim in thisparticular action stand after the complaint in the same action wasdismissed with prejudice?

In the resolution of this issue the following considerations arepertinent:

(1) A cross- claim, as de fined in Sect ion 7 of Rule 6 is

"any claim by one party against a co-party arising out of thetransaction or occurrence that is the subject matter either of theoriginal action or of a counterclaim therein."

(2) The cross-cla im of the Laicos against the Chivis wasfor the recovery of the sum of P51,294.00, upon the allegationsthat according to the contract of sale between them, "should thedefendants Chivi fail to transfer the title to the land in question tothe VENDEE (defendant Laico) then the former shall return to thelatter (the aforesaid sum) which is double the amount of thepurchase price received by the defendants Chivi;" and that "thedefendants Chivi are/or will be liable on these warranties andconditions should the plaintiffs (Sierras) finally obtain favorablejudgment in their favor" (sic).

(3) When Marta B. Chivi sold her "rights and interests" to

the land in question to the Laicos on 24 May 1958 the latter knew

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that Chivi had yet no registered title, and in fact substituted herin the registration proceeding which she had initiated.

(4) In their counterclaim for damages against the Sierrasin Civil Case No. 6184, the Laicos alleged that the "plaintiffs, infraudulently misrepresenting to the defendants Chivi, as well asto the defendants Laico, that the land in question is unregistered

and is not covered by a patent, thereby inducing the latter topurchase the land in question, which they would not have donehad they known that the land is covered by a patent, should beadjudged to pay ..."

(5) The warranty undertaken by Marta B. Chivi , judgingby its terms and by the surrounding circumstances was in respectof the transfer of ownership not of the registered title to theLaicos. The action filed by the Sierras was not for recovery ofsuch ownership but for the exercise of their alleged right ofrepurchase under the Public Land Act on the ground that the landthey had sold was covered by a patent title. In other words, thefiling of the action did not militate against the warranty totransfer title, for the very fact that the plaintiffs wished to enforcetheir alleged right of repurchase was predicated on theassumption that the title, that is, ownership, had been effectively

transferred first to Chivi an subsequently by the latter to theLaicos.

(6) In any event, even viewing the situation in the l ightmost favorable to the Laicos, their cross-claim on Chivi's warrantyto deliver title to them was so inextricably linked with and soutterly dependent upon the success of the complaint of theSierras for the repurchase of the land that when the complaintwas dismissed the cross-claim could not possibly survive. For asthe cross-claimants themselves alleged, the cross-defendantswould be liable on the warranty "should the plaintiffs finallyobtain favorable judgment in their favor" (sic). The warrantybecame functus oficio after the Sierras, who turned out after allto have a free patent title to the land issued way back in 1932,agreed to transfer and did transfer said title to the Laicos firstby the deed of sale executed directly in their favor by the Sierrason January 17, 1960, and again in the amicable settlement of the

case between them. The fact that the Laicos paid P10,000.00 tothe Sierras in that amicable settlement created no liability on thepart of the Chivis: first, because the latter neither knew norconsented to such settlement; second, because the Laicos hadalready acquired the land directly, from the Sierras by virtue ofthe aforesaid sale of January 17, 1960; and third because thesaid sum of P10,000.00 was not the subject of the cross-claimagainst them.

Apropos is the following statement of the legal principle:

A cross-bill strictly speaking is one brought by a defendant in anequity suit against ... other defendants in the same suit, touchingthe matters in question in the original bill. It is considered as anauxiliary suit dependent upon the original bill, and can besustained only on matters growing out of the original bill. There

is a well-defined distinction between a cross-bill merely defensive

in character, and one seeking affirmative relief. The dismissal ofthe original bill carries with it a purely defensive cross-bill but notone seeking affirmative relief. 1

The cross-claim in this case was purely defensive in nature. Itarose entirely out of the complaint and could prosper only if theplaintiffs succeeded. Hence, under the principle above

enunciated, it could not be the subject of independentadjudication once it lost the nexus upon which its life depended.

Under the circumstances above set forth the dismissal of thecross-claim should have followed the dismissal of the complaintas a matter of course, without further proceeding; and in settingthe said cross-claim for pre-trial and receiving evidence thereonand then rendering judgment against the cross-defendants thecourt committed such a grave abuse of discretion amounting tolack of jurisdiction correctible by certiorari.

Concerning the argument that the respondents here were guiltyof laches because they filed their petition for certiorari after thelapse of over 9 months from the time judgment of the Court ofFirst Instance was rendered, respondent Court of Appeals ruled in our opinion correctly as follows:

xxx xxx xxx

To the contention that the petitioners' action is barred laches, weare bound to disagree. The judgment by default was rendered onFebruary 5, 1965. It is not known when the petitioners receivedcopy of this judgment, but the fact is that on April 13, or afterthe lapse of only 2 months and 7 days from rendition of thejudgment, the petition for certiorari was filed with this Court.Principally, the petition assails the decision and the writ ofexecution thereof which was issued on April 1. Assuming that thedecision complained of was actually received by the petitionerson the date it was rendered, the intervening period to the filing ofthe petition is only 2 months and 7 days, which is shorter thanthe shortest period of 2 months and 26 days cited in therespondents' ex-parte motion for reconsideration in support oftheir theory of laches. And a mere 12 days intervened between

the issuance of the writ of execution and the filing of the petitionfor certiorari.

xxx xxx xxx

Parenthetically, this Court would like to state that JudgeGuillermo Torres should not have been made to appear as activeparty-petitioner in this case, his participation having becomefunctus oficio after the rendered judgment, and therefore his rolebeing purely nominal in this petition.

In view of the foregoing considerations, the judgment of theCourt of Appeals is affirmed, without pronouncement as to costs.

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Republic of the PhilippinesSUPREME COURTManilaEN BANC

G.R. No. L-24399 March 28, 1969FIRESTONE TIRE AND RUBBER COMPANY OF THEPHILIPPINES, plaintiff-appellee,vs.FERNANDO TEMPONGKO, defendant and third-partyplaintiff-appellant,ANTONIO LUNA, third-party defendant-appellee.

Cornelio C. Azarcon for plaintiff-appellee.Ang, Atienza & Tabora for third-party plaintiff-appellant FernandoTempongko.Antonio Cruz for third-party defendant-appellee An tonio Luna.

TEEHANKEE, J.:

The only issue of law raised in this appeal from an Order

of the Court of First Instance of Manila is: where plaintiffobtained judgment in the Municipal Court against defendant whoin turn obtained judgment for reimbursement against the third-party defendant, but only the latter appealed to the Court of FirstInstance, may plaintiff's judgment against defendant be deemedto have become final and executory?

The record shows the following facts:

In a collection action instituted in the City Court ofManila, defendant in the course of the presentation of hisevidence, obtained leave to file a third-party complaint againstthe third-party defendant. After proper proceedings, the CityCourt rendered judgment on the original complaint in favor ofplaintiff, and on the third-party complaint in favor of defendant,as third-party plaintiff, as follows:

WHEREFORE, judgment is hereby rendered in favor ofthe plaintiff and against the defendant Fernando Tempongko,ordering the latter to pay the former the sum of P1,992.40,representing the principal account, plus P200.00 stipulatedinterest up to January 31, 1964 and 1% interest per month fromFebruary, 1964, until the principal and interest are fully paid;ordering the defendant to pay the plaintiff the sum of P400.00 asand for attorney's fees; and the costs of suit.

On the third party complaint, judgment is herebyrendered in favor of the third party plaintiff and against the thirdparty defendant, ordering the latter to pay the former whateveramount the said third party plaintiff is ordered to pay the plaintiffin this case; plus an additional sum of P200.00 as and forattorney's fees.

The third-party defendant's counterclaim is herebydismissed. (Rec. on Appeal, pp. 3-4).

Only the third-party defendant appealed in due coursefrom the judgment rendered against him in the third-partycomplaint.

When the records were elevated to the Court of FirstInstance of Manila, plaintiff filed a Motion to Remand Case to thelower court, for execution of its judgment against defendant,alleging in substance that by virtue of defendant's failure toappeal, its judgment against defendant had become final andexecutory and was in no way affected by the appeal filed by thirdparty defendant from the judgment in favor of defendant in thethird-party complaint. 1

The Court of First Instance overruled defendant'sopposition to plaintiff's motion and issued an Order granting themotion for the remand of the case to the City Court for executionof its decision against defendant, directing that thereafter therecords be sent back to it "for trial de novo insofar as the third-party plaintiff and the third-party defendant are concerned." 2

This Order of execution is the challenged order beforethis Court.

Defendant and third-party plaintiff-appellant's appeal iswithout merit. The main prop of his appeal that "(T)he appellant'sthird-party complaint is in effect a defense to the plaintiff'scomplaint against him" and that "the intimate connection of theissues involved in the principal complaint and in the third-partycomplaint ... is sufficient to enable the herein appellant toventilate before the Court of First Instance his own case withoutthe need of appealing from that aspect of the decision whichdirectly imposes upon him the liability to pay the appellee" 3 isbereft of legal support or basis.lwphi1.et

The Court a quo, therefore, correctly issued its order forexecution of the judgment on the principal complaint in favor ofplaintiff on the strength of this Court's ruling in Singh vs. Liberty

Insurance Corporation 4 where speaking through Mr. JusticeDizon, this Court similarly disposed of an identical case:

Appellant admits that it did not appeal from the decisionof the Municipal Court but contends that the appeal therefromtaken by the third-party defendants insured to its benefit; thatsaid appeal vacated the decision not only as far as third-partydefendants were concerned but also with respect to thedefendant, although it did not appeal; that on appeal the caseshould be tried de novo as if it had never been tried before, andfinally, that being an appellee itself because of the judgment inits favor against the third-party defendants, it did not have toappeal from the decision of the Municipal Court.

It is true, as appellant claims that an appeal from thedecision of an inferior court (Municipal Court) operates to vacate

said decision, thereafter the case to stand trial de novo in the

Court of First Instance, but it seems obvious that this applies onlyto the party who had taken the appeal. As against other partiesadversely affected by the decision who did not appeal, thedecision must be deemed to have become final and executory. Acontrary view would lead to indefensible result.5

x x x x x x x x x

Our conclusions, therefore, are: first, that because thedefendant Liberty Insurance Corporation did not appeal from theadverse decision of the Municipal Court, it had no right to file theanswer in question, and second, that the decision of theMunicipal Court having become final and executory as againstsaid defendant, its execution was in order. This notwithstanding,said defendant is still an active party in the appealed casebecause of the appeal taken by the third-party defendants fromthe decision of the Municipal Court in so far as it was in favor ofsaid defendants as third-party plaintiff.6

A brief discussion of the Rule on third-party complaintsand of the nature and object thereof suffices to show therationale therefor.

Rule 6, section 12 defines a third-party complaint asfollows:

SEC. 12. Third-party complaint. A third-partycomplaint is a claim that a defending party may, with leave ofcourt, file against a person not a party to the action, called thethird-party defendant, for contribution, indemnity, subrogation orany other relief, in respect of his opponent's claim.

The third-party complaint, is therefore, a proceduraldevice whereby a "third party" who is neither a party nor privy tothe act or deed complained of by the plaintiff, may be broughtinto the case with leave of court, by the defendant, who acts asthird-party plaintiff to enforce against such third-party defendanta right for contribution, indemnity, subrogation or any otherrelief, in respect of the plaintiff's claim. The third-party complaintis actually independent of and separate and distinct from the

plaintiff's complaint. Were it not for this provision of the Rules ofCourt, it would have to be filed independently and separatelyfrom the original complaint by the defendant against the third-party. But the Rules permit defendant to bring in a third-partydefendant or so to speak, to litigate his separate cause of actionin respect of plaintiff's claim against a third party in the originaland principal case with the object of avoiding circuitry of actionand unnecessary proliferation of lawsuits and of disposingexpeditiously in one litigation the entire subject matter arisingfrom one particular set of facts. 7 Prior leave of Court isnecessary, so that where the allowance of a third-party complaintwould delay the resolution of the original case, such as when thethird-party defendant cannot be located 8 or where mattersextraneous to the issue of possession would unnecessarily cluttera case of forcible entry, 9 or the effect would be to introduce anew and separate controversy into the action, 10 the salutary

object of the rule would not be defeated, and the court should in

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such cases require the defendant to institute a separate action.When leave to file the third-party complaint is properly granted,the Court renders in effect two judgments in the same case, oneon the plaintiff's complaint and the other on the third-partycomplaint.

When he finds favorably on both complaints, as in this

case, he renders judgment on the principal complaint in favor ofplaintiff against defendant and renders another judgment on thethird-party complaint in favor of defendant as third-party plaintiff,ordering the third-party defendant to reimburse the defendantwhatever amount said defendant is ordered to pay plaintiff in thecase. Failure of any of said parties in such a case to appeal thejudgment as against him makes such judgment final andexecutory. By the same token, an appeal by one party from suchjudgment does not inure to the benefit of the other party whohas not appealed nor can it be deemed to be an appeal of suchother party from the judgment against him.

ACCORDINGLY, the Order of the Court a quo for theexecution of the decision of the City Court of Manila in favor ofplaintiff-appellee as against defendant-appellant is herebyaffirmed. With costs against defendant-appellant.

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G.R. No. L-56766 February 28, 1985CRESENCIO YU, EMETERIO YU, YU CHIN HOCK, ROBERTYU, ROSITA YU, ANITA YU, VALENTINO YU, TERESITA YU,YU CHU HA, PATROCINIO YU, ANITA ABELLANOSA, ONGOH, RONNIE YU, SONNY YU, SALLY YU, RENATO YU. YUENG TOY, ROSARIO YU, YU CHIN, IGNACIA YU,EVANGELISTA YU, FILOMENO YU and DONATO YU,petitioners,vs.HONORABLE COURT OF APPEALS, ROSETTE'S STORE and/orFLORENCIA CALIENTA; TAY T HONG TRADING and/or CHUACHUN; CHU HOC TRADING and/or JAIME TAN; SIN TICKHING and/or SY PAN; CEBU OVERSEA COMPANY and/orGREGORIA ABELLANOSA; STEPHEN ENTERPRISES and/orALBERTO GO; CONEY TEXTILE and/or TAN BING; VICKEYMARKETING; KIAN AN TRADING and/or J.T. LUA; PURITY

BAZAAR and/or VICTORIA GUEVARRA CO; MARGIE'SFASHION HOUSE and/or TAN LAM; EVERET SHOE CENTERand/or GO, CHUN; LAO ENG CHEONGS SONS CO.; and PO'SELECTRICAL SUPPLY, EMA ENTERPRISES and/or PO IM,respondents.Benedicto H. Alo for all private respondents.

CUEVAS, J.:

Petitioners in this special civil action of certiorari andPROHIBITION seek to annul and set aside for allegedly havingbeen issued with grave abuse of discretion amounting to lack ofjurisdiction, the Resolutions of the then Court of Appeals (nowthe Intermediate Appellate Court) dated October 13, 1980 andMarch 17, 1981 issued in CA-G.R. No. 65149-R. Petitioners

likewise pray that pending resolution of this petition on its merit,a temporary restraining order be issued enjoining therespondents from enforcing the said questioned resolutions.

Petitioners are respectively the Heirs of Yu Tiong and Yu Sun andare co-owners of the lot and the commercial building standingthereon covered by Transfer Certificate of Title No. 58345 of theRegister of Deeds of Cebu City. Private respondents, on the otherhand, are occupying separate portions of the aforesaid propertyas lessees thereof, pursuant to a verbal contract of lease on a"month-to-month basis" entered into by them with petitioners,and as such lessees, private respondents were paying one-half() of the agreed rentals to the heirs of Yu Tiong and the otherone-half () to the heirs of Yu Sun.

On July 22, 1976, petitioners wrote private respondents informing

them that they are increasing the rentals to take effect on

January 1977. Private respondents refused to agree to the posednew rental rates. On September 30, 1976, petitioners wroteanother letter to private respondents this time informing themthat general repair and renovation of the building had to beundertaken starting March 1, 1977. Private respondents againrefused to allow the repair and renovation. In view thereof,written demands were made upon the private respondents to

vacate the premises respectively occupied by them.

Instead of vacating the premises, private respondents started todeny the title of petitioners as their lessors and filed a complaintin intervention in Civil Case No. R-14977 of the Court of FirstInstance of Cebu, Branch IV. This case was dismissed sometimein March 1977 but was appealed by private respondents to thethen Court of Appeals.

Meanwhile, and more specifically on March 9, 1977, privaterespondents filed this case, Civil Case No. R-15971 in the Court ofFirst Instance of Cebu against petitioners for "Interpleader,Specific Performance, Fix Duration of Lease, Consignation withPrayer for Injunction."

Within the reglementary period, petitioners filed their answer

with special and affirmative defenses.

After a hearing on the affirmative defenses, the trial court in itsorder dated January 25, 1978 1 dismissed the complaint. Thepertinent portion of the order of dismissal reads-

After a careful scrutiny of the allegations and arguments of theparties, in support of and against the motions underconsideration, the Court finds no cogent reason to proceed withthis interpleader case against the defendant Heirs of Yu Tiong,considering that the plaintiffs have all along been paying therentals to them without objection from defendant-oppositorsRonnie Yu, Evangelista Yu, Rosario Yu, Ignacia Yu and Sonny Yuwhich clearly shows that plaintiffs and said defendant-oppositorshave recognized the rights of co-ownership of the defendantHeirs Yu Tiong over the property in question. There is, therefore,no legal justification in requiring them to interplead their rights in

the instant case.

With respect to the defendant Heirs of Yu Sun, there is also novalid reason to proceed with this case as there is actually anearlier which is now pending appeal in the Court of Appeals.

In the case of defendant-oppositor Ronnie Yu, the City Court ofCebu, Branch VIII, has rendered judgment in Civil Case No. R-17491, dismissing his claim of co-ownership over the propertyinvolved. In fact, his appeal from that decision to this Court wasdismissed and which order. of dismissal is now the subject of acertiorari proceedings in the Court of Appeals.

Under Sec. 1(3) of Rule 16, Rules of Court, pendency of anotheraction between the same parties for the same cause is a groundfor the dismissal of an action, provided that: (1) there is Identity

of parties, or at least such as representing the same interest in

both actions; (2) Identity of rights asserted or relief prayed for,the relief being founded on the same facts; (3) and the Identityon the two preceding particulars should be such that anyjudgment which may be rendered on the other action will,regardless of which party is successful, amount to res judicata inthe action under consideration. (Francisca Vda. de Blas, L-5073,May 4, 1953; Diana v. B.T.C., 49 O.G. 2238)

The fact that the parties in Civil Case No. R-14977, Civil Case No.R-17491 and this case are not exactly Identical will not preventthe action from being dismissed if there is Identity of issue.

Since the Identity of parties is not a mere matter of form, but ofsubstance, the rule of res judicata should not be defeated byminor differences of parties. Thus, where the issues in separatesuits are the same, the fact that the parties are not preciselyIdentical is not necessarily fatal to the conclusive effect of priorjudgment. In applying the rule, the Courts have allowedthemselves a good deal of latitude observing the spirit thereofrather than the letter and there are some well recognizedexceptions to or modifications of it. (50 C.J.S., 291-292)

Likewise, there is no merit to the contention of the defendant-

oppositors that the dispositive portion of the decision rendered inCivil Case No. R-17491 did not contain any declaration that thedefendant-movants are the owners of the property to theexclusion of the defendant-oppositors for it has been held that:

No strict formality in the language is necessary to express theadjudication of the court. The judgment is tested by its substancerather than its form. It is sufficient if the entry shows that theissue between the parties has been passed upon by the court andthe merits of the case finally determined. (Melton vs. St. Louie,I.M. & S.R. Co., 99 Ark. 433; 139 S.W. 289 Lutrell vs. Reynolds,63 Ark. 254; 37 S.W. 1051; Policarpio v. Philippine VeteransBank, et al., 106 Phil. 125).

The determinative factor is the intention of the court as gatheredfrom all parts of the judgment itself. In applying the rule, effectmust be given to that which is unavoidably and necessarily

implied in a judgment, as well as to that which is expressed inthe most appropriate language. (Am. Jur. 212-213; Falcon vs.Arca, 8 SCRA 591).

Furthermore, in the case of Leoncia D. Aguirre, et al., versusVicente Aguirre, et al., (58 SCRA 461-466), the Highest Tribunal,speaking through the Honorable Justice Antonio Barredo, positedthe rule that 'in interpreting the rights settled in a decision, thetenor of the opinion and the ratiocination in the decision shouldbe resorted to, to get the intention of the court. Likewise, if whatappears in the dispositive portion is absurd if set against whatappears in other parts of the decision, construction of judgmentmight be sanctionable notwithstanding jurisprudence to the effectthat it is the dispositive part of a decision that controlsirrespective of what might appear in the opinion part thereof.

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Anent the plaintiffs' second cause of action which is to fix theperiod of the lease and the amount of rentals, it was held by thehonorable Supreme Court in the case of Lim Si vs. Lim, L-84961,April 25, 1956, that consignation under Art. 1256 of the CivilCode is not the proper proceeding to determine the relationbetween landlord and tenant, the period of life of the lease ortenancy, the reasonableness of the amount of rental, the right of

the tenant to keep the premises against the will of the landlord,which are to be decided not in action of consignation but in thatof unlawful detainer that the lessor institute when the lesseerefuses to pay the rents he has fixed for the property.

From this, it is very clear that plaintiffs' cause of action for thefixing of the period of lease and the amount of rentals cannotstand legal scrutiny.

Private respondents appealed the aforesaid order of dismissal tothe then Court of Appeals under CA-G.R. No. 65149-R.

On November 23, 1979, petitioners filed before respondent Courtof Appeals a Motion to Dismiss private respondents' appeal onthe ground that their record on appeal was filed out of time. 2

In a Resolution dated November 27, 1979, respondent Court ofAppeals admitted private respondents' record on appeal andrequired them at the same time to file their appellants' briefwithin a period of forty five (45) days.

On February 25, 1980, on motion of private respondents for anextension of time to file brief, they were granted an unextendibleperiod of ninety (90) days, to expire on May 15, 1980.

Private respondents failed to file the required brief within thisperiod. Consequently, on August 21, 1980, respondent Court ofAppeals issued the following Resolution

Considering that despite receipt by counsel for the plaintiffs-appellants of the resolution of this court granting them anonextendible period of 90 days within which to file appellants'brief, no brief was filed up to this date, the Court RESOLVED to

CONSIDER the appeal on the above-entitled case ABANDONEDand DISMISSED. 3

On September 10, 1980, private respondents filed a "Motion toReconsider Order of Dismissals of Appeal and to Admit AttachedBrief of Appellants", alleging as grounds therefor, the following-

3. That the brief could not be f iled earl ier, as the casewas referred back to Carlos Po (in his lifetime) by counsel so thatanother counsel would appear and make the brief, but as itappears now, this never happened and the records were all keptin the file of the deceased and which is the main reason for thenon-filing thereof.

xxx xxx xxx

5. That the preparation of the brief would not have beendelayed were it not for the untimely death of Carlos Po on May14, 1980.

xxx xxx xxx

7. That there was no in tent to delay or frus trate th is

appeal and that plaintiffs-appellants have all interest to have thisappeal prosecuted to its end, and that they seek the liberality ofthe Honorable Court in the application of the rules, in the interestof justice that their appeal be allowed or reinstated and that thenon-filing on time of the brief was purely due to accident, i.e.,the death of Carlos Po. 4

This motion was opposed by petitioners 5 but in a Resolutiondated October 13, 1980, (one of the assailed resolutions)respondent Court of Appeals reconsidered its previous Resolutiondismissing the appeal and admitted private respondents' brief. 6Petitioners moved to reconsider said resolution alleging mainlythat the appeal of private respondents is "frivolous and dilatory."7 Respondent Court of Appeals in its Resolution dated March 17,1981 (the second questioned resolution) denied petitioners'motion for reconsideration. 8

Hence, the instant petition, petitioners contending that the twoquestioned resolutions dated October 13, 1980 9 and March 17,1981 10 are null and void having been issued with grave abuse ofdiscretion amounting to lack of jurisdiction.

On June 19, 1981, We required respondents to comment on thepetition and issued a temporary restraining order enjoiningrespondents from enforcing and/or implementing the questionedresolutions.

In a subsequent Resolution dated August 31, 1981, We gave duecourse to the petition and required the parties to file theirrespective memoranda.

We view the circumstances narrated above as justifying thesetting aside of the questioned resolutions of respondent Court of

Appeals. We find merit in the petition and consequently grant thereliefs prayed for by the petitioners.

The records show that the extended period granted to the privaterespondents within which to file their brief expired on May15,1980. The period granted lapsed without counsel having filedthe required appellants 'brief nor having explained his failure todo so. Consequently, the appeal was considered "dismissed" and"abandoned" in the resolution of respondent Court dated August21, 1980. It was only on September 15, 1980 or after a period offour (4) months from the due date that private respondentsthrough counsel, Atty. Benedicto H. Alo, (who was the samecounsel of private respondent in the lower court) mailed theirbrief, after receiving on September 4, 1980, the resolution ofrespondent Court dismissing the appeal. The reason advanced bycounsel for private respondents runs thus-

that the brief could not be filed earlier, as the case was referredback to Carlos Po (in his lifetime) by counsel, so that anothercounsel would appear and make the brief, but as it appears now,this never happened and the records were all kept in the files ofthe deceased, and which is the reason for the non-filing thereof.

The above explanation of counsel, Atty. Benedicto H. Alo, is far

from being satisfactory. If there were really moves to replace himas counsel and that for this reason he was unable to file thebriefs on time, it was his duty to inform respondent Court ofAppeals of said fact.

When counsel did not file the brief for the accused because thelatter's parents had considered retaining the services of anotherlawyer for that purpose, the least that was expected of counsel ofrecord was that he should inform this tribunal of thedevelopments set forth in his explanation and ask that he beallowed to withdraw as counsel. 11

An examination of the records of this case failed to reveal anywithdrawal made and formally filed by Atty. Benedicto H. Alo ascounsel for private respondents. Neither has there been a validsubstitution of counsel which maybe allowed only upon

compliance with the following requirements: (1) filing of a writtenapplication for substitution; (2) written consent of the client; (3)written consent of the lawyer to be substituted, if such consentcan be obtained; and (4) in case such written consent cannot beprocured, then application for substitution must be accompaniedwith proof of the service of notice of such motion in the mannerrequired by the rules, on the attorney to be substituted. 12

There being no withdrawal nor substitution of counsel made,Atty. Benedicto H. Alo r emains as counsel for private respondentsand for his failure to file the required briefs on time, his clients(herein private respondents) should suffer the consequencesthereof. For, it is settled that clients are bound by the mistakes,negligence and omission of their counsels. 13

But what militates very heavily against the reinstatement ofrespondents' appeal is its utter lack of merit. We see no prospect

of the Order sought to be appealed, being reversed or at leastmodified. From the assailed Order which is herein earlier quoted,it is clear that private respondents' action is one of "Interpleader,Specific Performance, Fix Duration of Lease, Consignation withPrayer for Injunction." The trial court ruled, after hearing on theaffirmative defenses and on the motion to dismiss, that thematters intended to be litigated are not contentious since privaterespondents had, all the while been "paying the rentals to theheirs of Yu Tiong without objection from defendant-oppositors.With respect to the heirs of Yu Sun, there is actually an earlierinterpleader case filed by the same parties." Besides,"consignation under Art. 1256 of the Civil Code is not the properproceeding to determine the relationship between landlord andtenant." Moreover, it is not disputed that private respondents'stay on the leased premises, is on a "month-to-month" basis, andas such, the lessors (herein petitioners) may terminate the lease

at the end of every month. 14 The records show that as early as

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September 1976, demands were made by petitioners uponprivate respondents as lessees, to vacate the leased premises.Instead of vacating the premises, private respondents filedseveral cases of Interpleader and consignation of rentals, asidefrom this instant case, before several branches of the Court ofFirst Instance of Cebu. 15 No doubt, said cases were resorted toby private respondents in order to prolong their stay in the leased

premises to the prejudice of the owners, herein petitioners. Tosustain, therefore, the reinstatement of private respondents'appeal and remand the case to respondent court for furtherproceeding will serve no purpose whatsoever. Rather, it will onlyimpair the speedy administration of justice, private respondents'appeal from the order of the trial court dismissing theircomplaint, being manifestly frivolous and completely devoid ofmerit. 16

WHEREFORE, the petition is GRANTED. The questionedResolutions of the Court of Appeals dated October 13, 1980 andMarch l7, 1981 are here by SET ASIDE and REVERSED. Civil CaseNo. R-15971 of the Court of First Instance of Cebu, Branch XII ishereby ordered DISMISSED. No pronouncement as to costs.

SO ORDERED.

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G.R. No. 141947 July 5, 2001ISMAEL V. SANTOS, ALFREDO G. ARCE and HILARIO M.PASTRANA, petitioners,vs.COURT OF APPEALS, PEPSI COLA PRODUCTS PHILS., INC.,LUIS P. LORENZO, JR. and FREDERICK DAEL, respondents.

BELLOSILLO, J.:

This petition for review seeks to annul the Resolution1 of theCourt of Appeals in CA-G.R. SP No. 54853 dated 28 September1999 which summarily dismissed petitioners' special civil actionfor certiorari for failing to execute properly the requiredverification and certification against forum shopping and tospecify the material dates from which the timeliness of thepetition may be determined.

Private respondent Pepsi Cola Products Phils., Inc. (PEPSI) is adomestic corporation engaged in the production, distribution andsale of beverages. At the time of their termination, petitionersIsmael V. Santos and Alfredo G. Arce were employed by PEPSI asComplimentary Distribution Specialists (CDS) with a monthlysalary of P 7,500.00 and P10,000.00, respectively, while HilarioM. Pastrana was employed as Route Manager with a monthlysalary of P 7 ,500.00.

In a letter dated 26 December 1994,2 PEPSI informed itsemployees that due to poor performance of its Metro ManilaSales Operations it would restructure and streamline certainphysical and sales distribution systems to improve itswarehousing efficiency. Certain positions, including that ofpetitioners, were declared redundant and abolished.Consequently, employees with affected positions were

terminated.

On 15 January 1995 petitioners left their respective positions,accepted their separation pays and executed the correspondingreleases and quitclaims. However, before the end of the year,petitioners learned that PEPSI created new positions calledAccount Development Managers (ADM) with substantially thesame duties and responsibilities as the CDS. Aggrieved, on 15Apri1 1996, petitioners filled a complaint with the Labor Arbiterfor illegal dismissal with a prayer for reinstatement, back wages,moral and exemplary damages and attorney's fees.

In their complaint, petitioners alleged that the creation of thenew positions belied PEPSI's claim of redundancy. They furtheralleged that the qualifications for both the CDS and ADMpositions were similar and that the employees hired for the latter

positions were even less qualified than they were.3 Likewise

taking note of possible procedural errors, they claimed that whilethey were notified of their termination, PEPSI had not shown thatthe Department of Labor and Employment (DOLE) was alsonotified as mandated by Art. 283 of the Labor Code which states-

Art. 283. Closure of Establishment and Reduction of Personnel.The employer may also terminate the employment of any

employee due to the installation of labor-saying devices,redundancy, retrenchment to prevent losses or the closing orcessation of operation of the establishment or undertaking unlessthe closing is for the purpose of circumventing the provisions ofthis title, by serving a written notice on the worker and theMinistry of Labor and Employment: at least one (1) month beforethe intended date thereof xxxx (italic supplied).

PEPSI, on the other hand, maintained that termination due toredundancy was a management prerogative the wisdom andsoundness of which were beyond the discretionary review of thecourts. Thus, it had the right to manage its affairs and decidewhich position was no longer needed for its operations. It furthermaintained that the redundancy program was made in good faithand was not implemented to purposely force certain employeesout of their employment. It also claimed that a close perusal of

the job descriptions of both the CDS and ADM positions wouldshow that the two (2) were very different in terms of the natureof their functions, areas of concerns, responsibilities andqualifications.4

On 18 June 1997, Labor Arbiter Romulus S. Protacio dismissedthe complaint for lack of merit. Furthermore, he ruled that theone (1)-month written notice prior to termination required by Art.283 was complied with.

On appeal, the National Labor Relations Commission (NLRC)affirmed the ruling of the Labor Arbiter. However, in its Decision5dated 5 March 1999 it found that the Establishment TerminationReport was submitted to the DOLE only on 5 April 1995 or two"(2) months after the termination had already taken place6 andthus effectively reversing the finding of the Labor Arbiter that therequired one (1)-month notice prior to termination was complied

with. Nonetheless, the NLRC dismissed the appeal, citingInternational Hardware, Inc. v. NLRC,7 which held -

x x x x if an employee consented to his retrenchment orvoluntarily applied for retrenchment with the employer due to theinstallation of labor-saving devices, redundancy, closure orcessation of operation or to prevent financial losses to thebusiness of the employer, the required previous notice to theDOLE is not necessary as the employee thereby acknowledgedthe existence of a valid cause for termination of his employmentx x x x (italics supplied).

On 10 September 1999, petitioners filed a special civil action forcertiorari with the Court of Appeals.8 The Court of Appeals in theassailed Resolution dismissed the petition outright for failure tocomply with a number of requirements mandated by Sec. 3, Rule

46, in relation to Sec. 1, Rule 65, of the 1997 Rules of Civil

Procedure. Respondent appellate court found that the verificationand certification against forum shopping were executed merelyby petitioners' counsel and not by petitioners. The petition alsofailed to specify the dates of receipt of the NLRC Decision as wellas the filing of the motion for reconsideration.9 Under theaforecited Rules, failure of petitioners to comply with any of therequirements was sufficient ground for the dismissal of the

petition.

Petitioners now present the sole issue of whether there wasfailure to comply with the requirements of the Rules in filing theirpetition for certiorari.

We find no manifest error on the part of the Court of Appeals;hence we affirm.

It is true that insofar as verification is concerned, we have heldthat there is substantial compliance if the same is executed by anattorney it being presumed that facts alleged by him are true tohis knowledge and belief.10 However the same does not apply asregards the requirement of a certification against forumshopping. Section 3, Rule 46 of the 1997 Rules of Civil Procedureexplicitly requires -

x x x x The petitioner shall also submit together with the petitiona sworn certification that he has not theretofore commenced anyother action involving the same issues in the Supreme Court, theCourt of Appeals or different divisions thereof, or any othertribunal or agency; if there is such other action or proceeding hemust state the status of the same; and if he should thereafterlearn that a similar action or proceeding has been filed or ispending before the Supreme Court, the Court of Appeals, ordifferent divisions thereof, or any other tribunal or agency, heundertakes to promptly inform the aforesaid courts and othertribunal or agency thereof within five (5) days therefrom x x x x

It is clear from the above-quoted provision that the certificationmust be made by petitioner himself and not by counsel since it ispetitioner who is in the best position to know whether he haspreviously commenced any similar action involving the same

issues in any other tribunal or agency.11

Petitioners argue that while it may be true that they are in thebest position to know whether they have commenced an actionor not this information may be divulged to their attorney andthere is nothing anomalous or bizarre about this disclosure.12They further maintain that they executed a Special Power ofAttorney specifically to authorize their counsel to execute thecertification on their behalf.

We are aware of our ruling in BA Savings Bank v. Sia13 that acertification against forum shopping may be signed by anauthorized lawyers who has personal knowledge of the factsrequired to be disclosed in such document. However, BA SavingsBank must be distinguished from the case at bar because in theformer, the complainant was a corporation, and hence, a juridical

person. Therefore, that case made an exception to the general

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rule that the certification must be made by the petitioner himselfsince a corporation can only act through natural persons. In fact,physical actions, e.g., signing and delivery of documents, may beperformed on behalf of the corporate entity only by specificallyauthorized individuals. In the instant case, petitioners, are allnatural persons and there is no showing of any reasonable causeto justify their failure to personally sign the certification.14 It is

noteworthy that PEPSI in its Comment stated that it waspetitioners themselves who executed the verification andcertification requirements in all their previous pleadings. Counselfor petitioners argues that as a matter of policy, a Special Powerof Attorney is executed to promptly and effectively meet anycontingency relative to the handling of a case. This argumentonly weakens their position since it is clear that at the outset nojustifiable reason yet existed for counsel to substitute petitionersin signing the certification. In fact, in the case of natural persons,this policy serves no legal purpose. Convenience cannot be madethe basis for a circumvention of the Rules.

Neither are we convinced that the out-right dismissal of thepetition would defeat the administration of justice. Petitionersargue that there are very important issues such as their livelihoodand the well being and future of their families.15 Every petition

filed with a judicial tribunal is sure to affect, even tangentially,either the well being and future of petitioner himself or that of hisfamily. Unfortunately, this does not warrant disregarding theRules.

Moreover, the petition failed to indicate the material dates thatwould show the timeliness of the filing thereof with the Court ofAppeals. There are three (3) essential dates that must be statedin a petition for certiorari brought under Rule 65. First, the datewhen notice of the judgment or final order or Resolution wasreceived; second, when a motion for new trial or reconsiderationwas filed; and third, when notice of the denial thereof wasreceived. Petitioners failed to show the first and second dates,namely, the date of receipt of the impugned NLRC Decision aswell as the date of filing of their motion for reconsideration.Petitioners counter by stating that in the body of the petition forcertiorari filed in the Court of Appeals, it was explicitly stated that

the, NLRC Resolution dated 11 May 1999 was received bypetitioners through counsel on 30 July 1999. They even reiteratethis contention in their Reply.

The requirement of setting forth the, three(3) dates in a petitionfor certiorari under Rule 65 is for the purpose of determining itstimeliness. Such a petition is required to be filed not later thansixty (60) days from notice of the judgment, order or Resolutionsought to be assailed.16 Therefore, that the petition for certiorariwas filed forty-one (41) days from receipt of the denial of themotion for reconsideration is hardly relevant. The Court ofAppeals was not in any position to determine when this periodcommenced to run and whether the motion for reconsiderationitself was filed on time since the material dates were not stated.It should not be assumed that in no event would the motion befiled later than fifteen (15) days. Technical rules of procedure are

not designed to frustrate the ends of justice. These are provided

to effect the proper and orderly disposition of cases and thuseffectively prevent the clogging of court dockets. Utter disregardof the Rules cannot justly be rationalized by harking on the policyof liberal construction. 17

But even if these procedural lapses are dispensed with, theinstant petition, on the merits, must still fail. Petitioners impute

grave abuse of discretion on the part of the NLRC for holding thatthe CDS and ADM positions were dissimilar, and for concludingthat the redundancy program of PEPSI was undertaken in goodfaith and that the case of International Hardware v. NLRC18 wasapplicable.

This Court is not a trier of facts. The question of whether theduties and responsibilities of the CDS and ADM positions aresimilar is a question properly belonging to both the Labor Arbiterand the NLRC. In fact, the NLRC merely affirmed the finding ofthe Labor Arbiter on this point and further elaborated on thedifferences between the two (2). Thus it ruled -

x x x x We cannot subscribe to the complainants' assertions thatthe positions have similar job descriptions. First CDS report to aCD Manager, whereas the ADMs do not report to the CD

Manager, leading us to believe that the organizational setup ofthe sales department has been changed.

Second, CDS are filed personnel who drive assigned vehicles anddeliver stocks to "dealers" who, under the job description arethose who sell and deliver the same stocks to smaller retailoutlets in their assigned areas. The ADMs are not required todrive trucks and they do not physically deliver stocks to wholesaledealers. Instead, they help "dealers" market the stocks throughretail. This conclusion is borne out by the fact (that) ADMs aretasked to ensure that the stocks are displayed in the bestpossible locations in the dealer's store, that they have more shelfspace and that dealers participate in promotional activities inorder to sell more products.

It is clear to us that while CDS are required to physically deliver,sell and collect payments for softdrinks, they do so not primarily

to retail outlets but to wholesale dealers who have retailcustomers of their own. They are not required to assist thedealers they deliver to in selling the softdrinks more effectivelywhereas ADMs sell softdrinks to big retail outlets (groceries andmalls who have shelves and display cases and who requirecoolers and other paraphernalia). They do not only sell but theyhave to effectively market the products or put them in the bestand most advantageous light so that the dealers who sell thesoftdrinks retails can sell more softdrinks. The main thrust of theADMs job is to ensure that the softdrinks products ordered fromthem are marketed in a certain manner ("Pepsi-Way standards")in keeping with the promotional thrust of the company.

Factual findings of the NLRC, particularly when they coincide withthose of the Labor Arbiter, are accorded respect, even finality,and will not be disturbed for as long as such findings are

supported by substantial evidence,19 defined as such relevant

evidence as a reasonable mind might accept as adequate tosupport a conclusion.20 In this case, there is no doubt that thefindings of the NLRC are supported by substantial evidence. Thejob descriptions submitted by PEPSI are replete with informationand is an adequate basis to compare and contrast the two (2)positions.

Therefore, the two (2) positions being different, it follows thatthe redundancy program instituted by PEPSI was undertaken ingood faith. Petitioners have not established that the title AccountDevelopment Manager was created in order to maliciouslyterminate their employment. Nor have they shown that PEPSIhad any ill motive against them. It is therefore apparent that therestructuring and streamlining of PEPSI's distribution and salessystems were an honest effort to make the company moreefficient.

Redundancy exists when the service capability of the work forceis in excess of what is reasonably needed to meet the demandsof the enterprise.21 A redundant position is one renderedsuperfluous by a number of factors, such as overhiring ofworkers, decreased volume of business, dropping of a particularproduct line previously manufactured by the company or phasing

out of a service previously undertaken by the business.22

Based on the fact that PEPSI's Metro Manila Sales Operationswere not meeting its sales targets,23 and on the fact that newpositions were subsequently created, it is evident that PEPSIwanted to restructure its organization in order to include morecomplex positions that would either absorb or render completelyunnecessary the positions it had previously declared redundant.The soundness of this business judgment of PEPSI has beenassailed by petitioners, arguing that it is more logical toimplement new procedures in physical distribution, sales quotas,and other policies aimed at improving the performance of thedivision rather than to reduce the number of employees andcreate new positions.24

This argument cannot be accepted. While it is true thatmanagement may not, under the guise of invoking its

prerogative, ease out employees and defeat their constitutionalright to security of tenure, the same must be respected if clearlyundertaken in good faith and if no arbitrary or malicious action isshown.

Similarly, in Wiltshire File Co., Inc. v. NLRC25 petitioner companyeffected some changes in its organization by abolishing theposition of Sales Manager and simply adding the duties previouslydischarged by it

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