Category: LATEST SUPREME COURT CASES


 

CASE NO. 2011-0081: HEIRS OF JOSE MARCIAL K. OCHOA NAMELY: RUBY B. OCHOA, MICAELA B. OCHOA AND JOMAR B. OCHOA VS. G & S TRANSPORT CORPORATION (G.R. NO. 170071); G & S TRANSPORT CORPORATION VS.  HEIRS OF JOSE MARCIAL K. OCHOA NAMELY: RUBY B. OCHOA, MICAELA B. OCHOA AND JOMAR B. OCHOA (G.R. NO.  170125, 9 MARCH 2011, DEL CASTILLO, J.) (SUBECTS: WRECKLESS IMPRUDENCE; CONTRACT OF CARRIAGE; LOSS OF INCOME, HOW COMPUTED; MORAL DAMAGES; FACTUAL FINDINGS DEEMED FINAL. (BRIEF TITLE: HEIRS OF OCHOA VS. G& S TRANSPORT. 

 

   

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA,

                               Petitioners,

 

versus-

 

G & S TRANSPORT CORPORATION,

                            Respondent.

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

 

G & S TRANSPORT CORPORATION,

                            Petitioner,

  G.R. No. 170071

 

 

 

 

 

 

 

 

 

 

 

G.R. No.  170125

    Present:
- versus -   CORONA, C. J., Chairperson,
    VELASCO, JR.,
 

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA,

                               Respondents.

  LEONARDO-DE CASTRO,

DEL CASTILLO, and,

PEREZ, JJ.

 

Promulgated:

March 9, 2011

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – x

D E C I S I O N

 

DEL CASTILLO, J.:

 

            An accident which claimed the life of a passenger is the root of these two petitions – one brought before us by the common carrier and the other by the heirs of the deceased.

            These consolidated Petitions for Review on Certiorari assail the Court of Appeals’ (CA) Decision[1] dated June 29, 2005 in CA-G.R. CV No. 75602 which affirmed with modification the December 21, 2001 Decision and March 5, 2002 Order of the trial court.  Likewise assailed is the Resolution[2] dated October 12, 2005 denying the parties’ respective Motions for Reconsideration thereto.

Factual Antecedents

 

            Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10, 1995 while on board an Avis taxicab owned and operated by G & S Transport Corporation (G & S), a common carrier.  As narrated by the trial court, the circumstances attending Jose Marcial’s death are as follows:

It appears that sometime in the evening of March 10, 1995, at the Manila Domestic Airport, the late Jose Marcial K. Ochoa boarded and rode a taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and operated by defendant corporation under the business name “Avis Coupon Taxi” (Avis) and driven by its employee and authorized driver Bibiano Padilla, Jr. on his way home to Teacher’s Village, Diliman, Quezon City.

At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at high speed.  While going up the Boni Serrano (Santolan) fly-over, it overtook another cab driven by Pablo Clave and tried to pass another vehicle, a ten-wheeler cargo truck.  Because of the narrow space between the left side railing of the fly-over and the ten-wheeler truck, the Avis cab was unable to pass and because of its speed, its driver (Padilla) was unable to control it.  To avoid colliding with the truck, Padilla turned the wheel to the left causing his taxicab to ram the railing throwing itself off the fly-over and fell on the middle surface of EDSA below.  The forceful drop of the vehicle on the floor of the road broke and split it into two parts.  Both driver Padilla and passenger Jose Marcial K. Ochoa were injured and rushed to the hospital.  At the East Avenue Medical Center, Ochoa was not as lucky as Padilla who was alive.  He was declared dead on arrival from the accident.  The death certificate issued by the Office of the Civil Registrar of Quezon City cited the cause of his death as vehicular accident.[3]

On May 13, 1999, Jose Marcial’s wife, Ruby Bueno Ochoa, and his two minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs), through counsel, sent G & S a letter[4] demanding that the latter indemnify them for Jose Marcial’s death, his loss of earning capacity, and funeral expenses in the total amount of P15,000,000.00.  As G & S failed to heed the same, the heirs filed aComplaint[5] for Damages before the Regional Trial Court (RTC) of Pasig City which was raffled to Branch 164 of said court.

The heirs alleged that G & S, as a common carrier, is under legal obligation to observe and exercise extraordinary diligence in transporting its passengers to their destination safely and securely. However, G & S failed to observe and exercise this extraordinary diligence because its employee failed to transport Jose Marcial to his destination safely.  They averred that G & S is liable to them for having breached the contract of common carriage.  As an alternative cause of action, they asserted that G & S is likewise liable for damages based on quasi-delict pursuant to Article 2180[6] in relation to Article 2176[7] of the Civil Code.  The heirs thus prayed for G & S to pay them actual damages, moral damages, exemplary damages, and attorney’s fees and expenses of litigation.

            In its Answer With Compulsory Counterclaims,[8] G & S claimed that Jose Marcial boarded an Avis taxicab driven by its employee, Bibiano Padilla (Padilla), at the Domestic Airport to bring him to Teacher’s Village in Quezon City.  While passing the Santolan fly-over, however, the Avis taxicab was bumped by an on-rushing delivery van at the right portion causing the taxicab to veer to the left, ram through the left side of the railings of the fly-over and fall to the center of the island below.  The taxicab was split into two and Jose Marcial was thrown 10 meters away.  G & S posited that the proximate cause of  Jose Marcial’s  death is a

fortuitous event and/or the fault or negligence of the driver of the delivery van that hit the taxicab.  It likewise claimed that it exercised the diligence required of a good father of a family in the selection and supervision of its employees including Padilla.  By way of compulsory counterclaim, G & S sought to recover from the heirs the amount of P300,000.00 as attorney’s fees and costs of suit.

Ruling of the Regional Trial Court

On December 27, 2001, the trial court rendered a Decision[9] finding the vehicular mishap not caused by a fortuitous event but by the negligence of Padilla.  It likewise found the evidence adduced by G & S to show that it exercised the diligence of a good father of a family in the selection and supervision of its employees as insufficient.  Hence, the trial court declared G & S civilly liable to the heirs.  However, for lack of receipts or any proof of funeral expenses and other actual damages, the trial court denied the heirs’ claim for actual damages.  It also denied them moral and exemplary damages for lack of legal basis. The dispositive portion of said Decision reads:

            WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage and is ordered to pay plaintiffs the following amounts:

1.              P50,000.00 as civil indemnity for the death of deceased Jose Marcial K. Ochoa;

2.              P6,537,244.96 for the loss of earning capacity of the deceased;

3.              P100,00.00 for attorney’s fees;

4.              And the cost of litigation.

SO ORDERED.[10]

            G & S filed a Notice of Appeal[11] while the heirs filed a Motion for Partial Reconsideration.[12]  The heirs averred that they are entitled to moral damages pursuant to Article 1764[13] in relation to Article 2206(3)[14] of the Civil Code.  They also cited applicable jurisprudence providing that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage where the mishap results in the death of the passenger. With respect to their claim for exemplary damages, the heirs relied upon Article 2232 of the Civil Code which provides that in contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.  And, since Padilla was declared by the trial court to have been grossly negligent in driving the taxicab, the heirs claimed that they are likewise entitled to exemplary damages. 

            After G & S filed its Opposition (To Plaintiffs’ Motion for Partial Reconsideration),[15] the trial court issued an Order[16]on March 5, 2002.  It found merit in the heirs’ Motion for Partial Reconsideration and thus declared them entitled to moral and exemplary damages, viz:

WHEREFORE, the decision dated December 27, 2001 is hereby modified so as to order defendant Corporation to pay plaintiffs the amount of P300,000.00 as moral damages and P50,000.00 as exemplary damages.  The dispositive portion of said decision is hereby amended to read as follows:

‘WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage and is ordered to pay plaintiffs the following amounts:

1.     P50,000.00 as civil indemnity for the death of the deceased Jose Marcial K. Ochoa;

2.     P6,537,244.96 for the loss of earning capacity of the deceased.

3.              P300,000.00 as moral damages;

4.              P50,000.00 as exemplary damages;

5.              P100,000.00 for attorney’s fees;

6.              And the costs of litigation.’

                                SO ORDERED.[17]

Because of this, G & S filed another Notice of Appeal[18] and same was given due course by the trial court in an Order[19]dated April 23, 2002.

Ruling of the Court of Appeals

 

            Before the CA, G & S continued to insist that it exercised the diligence of a good father of the family in the selection and supervision of its employees.   It averred that it has been carrying out not only seminars for its drivers even before they were made to work, but also periodic evaluations for their performance.  Aside from these, it has also been conducting monthly check-up of its automobiles and has regularly issued rules regarding the conduct of its drivers.  G & S claimed that it was able to establish a good name in the industry and maintain a clientele. 

            In an effort to build up Padilla’s character as an experienced and careful driver, G & S averred that: (1) before G & S employed Padilla, he was a delivery truck driver of Inter Island Gas Service for 11 years; (2) Padilla has been an employee of G & S from 1989 to 1996 and during said period, there was no recorded incident of his being a negligent driver; (3) despite his qualifications, G & S still required Padilla to submit an NBI clearance, driver’s license and police clearance; (4) Padilla’s being a good driver-employee was manifest in his years of service with G & S, as in fact, he has received congratulatory messages from the latter as shown by the inter-office memos dated August 23, 1990 and February 1, 1993; and that (5) Padilla attended a seminar at the Pope Pius Center sometime in December 1999 as part of the NAIA Taxi Operation Program.

            G & S also argued that the proximate cause of Jose Marcial’s death is a fortuitous event and/or the fault or negligence of another and not of its employee.  According to G & S, the collision was totally unforeseen since Padilla had every right to expect that the delivery van would just overtake him and not hit the right side of the taxicab.  Therefore, what transpired was beyond Padilla’s control.  There was no negligence on his part but on the part of the driver of the delivery van.  For this reason, G & S opined that it was not liable to the heirs.

            On the other hand, the heirs maintained that Padilla was grossly negligent in driving the Avis taxicab on the night of March 10, 1995.  They claimed that Padilla, while running at a very high speed, acted negligently when he tried to overtake a ten-wheeler truck at the foot of the fly-over.  This forced him to swerve to the left and as a consequence, the Avis taxicab hit the center of the railing and was split into two upon hitting the ground.  The manner by which Padilla drove the taxicab clearly showed that he acted without regard to the safety of his passenger.

            The heirs also averred that in order for a fortuitous event to exempt one from liability, it is necessary that he has committed no negligence or conduct that may have occasioned the loss.  Thus, to be exempt from liability for the death of Jose Marcial on this ground, G & S must clearly show that the proximate cause of the casualty was entirely independent of human will and that it was impossible to avoid.  And since in the case at bar it was Padilla’s inexcusable poor judgment, utter lack of foresight and extreme negligence which were the immediate and proximate causes of the accident, same cannot be considered to be due to a fortuitous event.  This is bolstered by the fact that the court trying the case for criminal negligence arising from the same incident convicted Padilla for said charge.[20]

            At any rate, the heirs contended that regardless of whether G & S observed due diligence in the selection of its employees, it should nonetheless be held liable for the death of Jose Marcial pursuant to Article 1759 of the Civil Code which provides:

ART. 1759 – Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

            In sum, the heirs prayed that the appeal be dismissed for lack of merit and the assailed Decision and Order of the trial court be affirmed in toto.

 

            In a Decision[21] dated June 29, 2005, the CA ruled in favor of the heirs.  The appellate court gave weight to their argument that in order for a fortuitous event to exempt one from liability, it is necessary that he committed no negligence or misconduct that may have occasioned the loss.  In this case, the CA noted that Padilla failed to employ reasonable foresight, diligence and care needed to exempt G & S from liability for Jose Marcial’s death.  Said court also quoted pertinent portions of the MTC decision convicting Padilla of reckless imprudence resulting in homicide to negate G & S’ claim that the proximate cause of the accident was the fault of the driver of the delivery van who allegedly hit the right side of the taxicab.  And just like the trial court, the CA found insufficient the evidence adduced by G & S to support its claim that it exercised due diligence in the selection and supervision of its employees.

             With respect to the award of P6,537,244.96 for Jose Marcial’s loss of earning capacity, the CA declared the same unwarranted.  It found the Certification[22] issued by Jose Marcial’s employer, the United States Agency for International Development (USAID) through its Chief of Human Resources Division Jonas Cruz (Cruz), as self-serving, unreliable, and biased.  While said certification states that Jose Marcial was earning an annual salary of P450,844.49 at the time of his untimely demise, the CA noted that same is unsupported by competent evidence such as income tax returns or receipts.  This is in view of the ruling inPeople v. Ereño[23] where it was held that “there must be unbiased proof of the deceased’s average income.”  Anent moral damages, the CA found the award of P300,000.00 excessive and thus reduced the same to P200,000.00 as to make it proportionate to the award of exemplary damages which is P50,000.00. The dispositive portion of said Decision reads:

WHEREFORE, the assailed Decision dated December 27, 2001 and Order dated March 5, 2002 are AFFIRMED with the following MODIFICATION:  appellant is ordered to pay appellees the sum of P50,000.00 as civil indemnity for the death of the deceased Jose Marcial K. Ochoa, P200,000.00 as moral damages, P50,000.00 as exemplary damages, P100,000.00 for attorney’s fees and the costs of litigation.  The trial court’s award of P6,537,244.96 for the loss of earning capacity of the deceased is DELETED for lack of basis.

SO ORDERED.

 

 

            Both parties moved for reconsideration[24] but the CA denied their respective motions for reconsideration in a Resolution[25] dated October 12, 2005.

            Hence, G & S and the heirs filed their respective Petitions for Review on Certiorari before this Court. The heirs’ petition was docketed as G.R. No. 170071 and that of G & S as G.R. No. 170125.  These petitions were later consolidated pursuant to this Court’s Resolution of November 21, 2005.[26] 

G.R. No. 170125

 

G & S anchors its petition on the following grounds:

I.     THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE PROXIMATE CAUSE OF DEATH OF MR. JOSE MARCIAL K. OCHOA WAS A FORTUITOUS EVENT AND/OR WAS DUE TO THE FAULT OR NEGLIGENCE OF ANOTHER AND SHOULD THUS EXEMPT THE PETITIONER FROM LIABILITY.

II.    THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING NOTE OF THE FACT THAT THE PETITIONER’S EMPLOYEE HAD BEEN ACQUITTED OF THE CRIME OF RECKLESS IMPRUDENCE RESULTING (IN) HOMICIDE.

III.  THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE TESTIMONY OF A WITNESS WHO SURFACED MONTHS AFTER THE INCIDENT WHILE DISREGARDING THAT OF AN EYEWITNESS WHO WAS PRESENT AT THE TIME AND PLACE OF THE ACCIDENT.

IV.  THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE PETITIONER EXERCISED THE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF ITS EMPLOYEES PARTICULARLY MR. BIBIANO PADILLA.[27]

            G & S reiterates its arguments that the proximate cause of the accident is a fortuitous event and/or the negligence of the driver of the delivery van which bumped the right portion of its taxicab and, that it exercised the diligence of a good father of a family in the selection and supervision of its employees.  It faults the CA when it overlooked the fact that the MTC Decision convicting Padilla of reckless imprudence has already been reversed on appeal by the RTC with Padilla having been accordingly acquitted of the crime charged.  Moreover, it claims that the appellate court erred in according respect to the testimony of the lone prosecution witness, Pablo Clave (Clave), when it concluded that Padilla was driving negligently at the time of the accident.  It asserts that Clave is not a credible witness and so is his testimony. Thus, G & S prays that the assailed CA Decision and Resolution be reversed and set aside.

            On the other hand, the heirs posit that the determination of the issues raised by G & S necessarily entails a re-examination of the factual findings which this Court cannot do in this petition for review on certiorari.  At any rate, they maintain that the trial court itself is convinced of Clave’s credibility.  They stress the settled rule that the evaluation of the credibility of witnesses is a matter that particularly falls within the authority of the trial court because it had the opportunity to observe the demeanor of the witnesses on the stand. 

            The heirs assert that fortuitous event was not the proximate cause of the mishap.  They point out that as correctly found by the trial court, Padilla was running at an extremely high speed. This was why the impact was so strong when the taxicab rammed the fly-over railings and was split into two when it hit the ground. Also, while it is true that the MTC Decision in the criminal case for reckless imprudence has been reversed by the RTC, this does not excuse G & S from its liability to the heirs because its liability arises from its breach of contract of carriage and from its negligence in the selection and supervision of its employees.  Also, since the acquittal of Padilla is based on reasonable doubt, same does not in any way rule out his negligence as this may merely mean that the prosecution failed to meet the requisite quantum of evidence to sustain his conviction.  Therefore, G & S cannot bank on said acquittal to disprove its liability.   

G.R. No. 170071    

 

            The heirs, on the other hand, advance the following grounds in support of their petition:

THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN COMPLETELY DELETING THE TRIAL COURT’S AWARD FOR THE LOSS OF EARNING CAPACITY OF THE DECEASED.

THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN REDUCING THE TRIAL COURT’S AWARD FOR MORAL DAMAGES.[28]

            The focal point of the heirs’ petition is the CA’s deletion of the award of P6,537,244.96 for Jose Marcial’s loss of earning capacity as well as the reduction of the award of moral damages from P300,000.00 to P200,000.00.

            The heirs aver that the appellate court gravely erred in relying upon Ereño as said case is not on all fours with the present case.  They contend that in Ereño, this Court disallowed the award for loss of income because the only proof presented was a handwritten statement of the victim’s spouse stating the daily income of the deceased as a self-employed fish vendor.  The heirs argue that the reason why this Court declared said handwritten statement as self-serving is because the one who prepared it, the deceased’s wife, was also the one who would directly and personally benefit from such an award.[29]  This cannot be said in the case at bar since the same bias and personal interest cannot be attributed to Jose Marcial’s employer, the USAID.  Unlike in Ereño, USAID here does not stand to be benefited by an award for Jose Marcial’s loss of earning capacity.  Clearly, the Certification issued by it is far from being self-serving.  At any rate, the heirs contend that Ereño has already been superseded by Pleyto v. Lomboy[30]where this Court held that in awarding damages for loss of earning capacity, “mere testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of earning capacity”.  In addition, the heirs point out that the authenticity and accuracy of said Certification was neither questioned by G & S nor discredited by any controverting evidence.  In fact, its admission by the trial court was not even assigned by G & S as an error in their appeal before the CA.

            As to the reduction of moral damages, the heirs claim that since the CA agreed with the factual circumstances of the case as found by the trial court, there is therefore no reason for it to alter the award of damages arising from such factual circumstances. They aver that the CA may only modify the damages awarded by the trial court when it is excessive and scandalous as held inMeneses v. Court of Appeals.[31]  Here, they claim that the award of moral damages in the amount of P300,000.00 cannot be considered as excessive and unreasonable but only commensurate to the sufferings caused by the incident to a wife who became a young widow at the age of 33 and to two minor children who lost a father.  Moreover, the heirs aver that the CA should not have reduced the award of moral damages just to make said amount proportionate to the exemplary damages awarded.  This is because there is no such rule which dictates that the amount of moral damages should be proportionate to that of the exemplary damages. The heirs pray that the assailed CA Decision and Resolution be reversed and set aside insofar as they deleted the award for loss of earning capacity and reduced the award for moral damages.

 

            For its part, G & S avers that the Certification issued by USAID is self-serving because the USAID officer who issued it has not been put on the witness stand to validate the contents thereof.  Moreover, said Certification was not supported by competent evidence such as income tax returns and receipts.  G & S likewise finds the reduction of the award of moral damages appropriate in view of the settled rule that moral damages are not meant to enrich the complainant at the expense of the defendant.  Hence, it prays that the petition be dismissed for lack of merit.

Our Ruling

We shall first tackle the issues raised by G & S in its petition.

The first, third and fourth issues raised by G & S involve questions of fact

We have reviewed said issues and we find that the determination of the first, third and fourth issues raised entails re-examination of the evidence presented because they all involve questions of fact.  In Microsoft Corporation v. Maxicorp, Inc.,[32]we held that:

Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact.  If the query requires a re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to each other, the issue in that query is factual. Our ruling in Paterno v. Paterno is illustrative on this point:

Such questions as whether certain items of evidence should be accorded probative value or weight, or rejected as feeble or spurious, or whether or not the proof on one side or the other are clear and convincing and adequate to establish a proposition in issue, are without doubt questions of fact.  Whether or not the body of proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted by adverse party, may be said to be strong, clear and convincing; whether or not certain documents presented by one side should be accorded full faith and credit in the face of protests as to their spurious character by the other side; whether or not inconsistencies in the body of proofs of a party are of such a gravity as to justify refusing to give said proofs weight – all these are issues of fact. (Citations omitted)

            In this case, the said three issues boil down to the determination of the following questions: What is the proximate cause of the death of Jose Marcial?  Is the testimony of prosecution witness Clave credible?  Did G & S exercise the diligence of a good father of a family in the selection and supervision of its employees?  Suffice it to say that these are all questions of fact which require this Court to inquire into the probative value of the evidence presented before the trial court.  As we have consistently held, “[t]his Court is not a trier of facts.  It is not a function of this court to analyze or weigh evidence.  When we give due course to such situations, it is solely by way of exception.  Such exceptions apply only in the presence of extremely meritorious circumstances.”[33]  Here, we note that although G & S enumerated in its Consolidated Memorandum[34] the exceptions[35] to the rule that a petition for review on certiorari should only raise questions of law, it nevertheless did not point out under what exception its case falls. And, upon review of the records of the case, we are convinced that it does not fall under any.  Hence, we cannot proceed to resolve said issues and disturb the findings and conclusions of the CA with respect thereto.  As we declared in Diokno v. Cacdac:[36]

                It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it reviews only questions of law.  The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below.  This is already outside the province of the instant Petition for Certiorari.[Citations omitted.]

There is a contract of carriage between G & S and Jose Marcial

What is clear from the records is that there existed a contract of carriage between G & S, as the owner and operator of the Avis taxicab, and Jose Marcial, as the passenger of said vehicle.   As a common carrier, G & S “is bound to carry [Jose Marcial] safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.”[37]  However, Jose Marcial was not able to reach his destination safely as he died during the course of the travel. “In a contract of carriage, it is presumed that the common carrier is at fault or is negligent when a passenger dies or is injured.  In fact, there is even no need for the court to make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence.”[38]  Unfortunately, G & S miserably failed to overcome this presumption.  Both the trial court and the CA found that the accident which led to Jose Marcial’s death was due to the reckless driving and gross negligence of G & S’ driver, Padilla, thereby holding G & S liable to the heirs of Jose Marcial for breach of contract of carriage.

The acquittal of Padilla in the criminal case is immaterial to the instant case for breach of contract

This thus now leaves us with the remaining issue raised by G & S, that is, whether the CA gravely erred in not taking note of the fact that Padilla has already been acquitted of the crime of reckless imprudence resulting in homicide, a charge which arose from the same incident subject of this case.

Article 31 of the Civil Code provides, viz:

 

When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result of the latter.

Thus, in Cancio, Jr. v. Isip,[39] we declared:

In the instant case, it must be stressed that the action filed by petitioner is an independent civil action, which remains separate and distinct from any criminal prosecution based on the same act.  Not being deemed instituted in the criminal action based on culpa criminal, a ruling on the culpability of the offender will have no bearing on said independent civil action based on an entirely different cause of action, i.e., culpa contractual.” (Emphasis supplied; Citations omitted.)

            In this case, the action filed by the heirs is primarily for the recovery of damages arising from breach of contract of carriage allegedly committed by G & S.  Clearly, it is an independent civil action arising from contract which is separate and distinct from the criminal action for reckless imprudence resulting in homicide filed by the heirs against Padilla by reason of the same incident.  Hence, regardless of Padilla’s acquittal or conviction in said criminal case, same has no bearing in the resolution of the present case.  There was therefore no error on the part of the CA when it resolved this case without regard to the fact that Padilla has already been acquitted by the RTC in the criminal case.  Moreover, while the CA quoted some portions of the MTC Decision in said criminal case, we however find that those quoted portions were only meant to belie G & S’ claim that the proximate cause of the accident was the negligence of the driver of the delivery van which allegedly hit the Avis taxicab.  Even without those quoted portions, the appellate court’s ultimate finding that it was Padilla’s negligence which was the proximate cause of the mishap would still be the same.  This is because the CA has, in fact, already made this declaration in the earlier part of its assailed Decision.  The fact that the MTC Decision from which the subject quoted portions were lifted has already been reversed by the RTC is therefore immaterial.

            In view of the foregoing, we deny G & S’ petition for lack of merit.

The denial by the CA of the heirs’ claim for lost earnings is unwarranted

 

            Going now to the petition filed by the heirs, we note at the outset that the issues of whether the CA erred in deleting the award for loss of earning capacity and in reducing the award for moral damages made by the trial court likewise raise questions of fact as they “involve an examination of the probative value of the evidence presented by the parties”.[40]  However, we find that the heirs’ case falls under one of the exceptions because the findings of the CA conflict with the findings of the RTC.[41]  Since the heirs properly raised the conflicting findings of the lower courts, it is proper for this Court to resolve such contradiction.[42] 

            In Ereño, we denied the claim for loss of income because the handwritten estimate of the deceased’s daily income as a self-employed vendor was not supported by competent evidence like income tax returns or receipts.  This was in view of the rule that compensation for lost income is in the nature of damages and as such requires due proof of damages suffered.  We reiterated this rule in People v. Yrat[43] where we likewise denied the same claim because the only evidence presented to show that the deceased was earning P50,000.00 a month was the testimony of the wife.  There we stated that for lost income due to death, there must be unbiased proof of the deceased’s average income.  Self-serving, hence, unreliable statement is not enough.  In People v. Caraig,[44]we declared that “documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity.  By way of exception, damages therefor may be awarded despite the absence of documentary evidence, provided that there is testimony that the victim was either (1) self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the victim’s line of work no documentary evidence is available; or (2) employed as a daily-wage worker earning less than the minimum wage under current labor laws”.  However, we subsequently ruled in Pleyto v. Lomboy[45] that “failure to present documentary evidence to support a claim for loss of earning capacity of the deceased need not be fatal to its cause.  Testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of earning capacity”.  Hence, we held as sufficient to establish a basis for an estimate of damages for loss of earning capacity the testimony of the victim’s widow that her husband was earning a monthly income of P8,000.00.  Later, in Victory Liner, Inc. v. Gammad,[46] after finding that the deceased’s earnings does not fall within the exceptions laid down in Caraig, we deleted the award for compensatory damages for loss of earning capacity as same was awarded by the lower courts only on the basis of the husband’s testimony that the deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue with a salary ofP83,088.00 per annum at the time of her death.  This same rule was also applied in the 2008 case of Licyayo v. People.[47] 

            In all of the cases mentioned except for Ereño, the sole basis for the claim for loss of earning capacity were the testimonies of the claimants.  This is not the case here.  Just like in Ereño where the testimony of the mother of the deceased was accompanied by a handwritten estimate of her daughter’s alleged income as a fish vendor, the testimony of Jose Marcial’s wife that he was earning around P450,000.00 a year was corroborated by a Certification issued by the USAID.  However in Ereño, we declared as self-serving the handwritten estimate submitted by the mother hence we denied the claim for such award.  Based on said ruling, the CA in this case deleted the award for lost income after it found the USAID Certification to be self-serving and unreliable.  

            We disagree.  The CA sweepingly concluded that the USAID Certification is self-serving and unreliable without elaborating on how it was able to arrive at such a conclusion.  A research on USAID reveals that it is the “principal [United States] agency to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms.”[48]  It is an “independent federal government agency that receives over-all foreign policy guidance from the Secretary of the State [of the United States].”[49] Given this background, it is highly improbable that such an agency will issue a certification containing unreliable information regarding an employee’s income.  Besides, there exists a presumption that official duty has been regularly performed.[50]Absent any showing to the contrary, it is presumed that Cruz, as Chief of Human Resources Division of USAID, has regularly performed his duty relative to the issuance of said certification and therefore, the correctness of its contents can be relied upon.  This presumption remains especially so where the authenticity, due execution and correctness of said certification have not been put in issue either before the trial court or the CA.  As to its being self-serving, our discussion on “self-serving evidence” in Heirs of Pedro Clemeña y Zurbano v. Heirs of Irene B. Bien[51] is enlightening, viz:

‘Self-serving evidence,’ perhaps owing to its descriptive formulation, is a concept much misunderstood. Not infrequently, the term is employed as a weapon to devalue and discredit a party’s testimony favorable to his cause. That, it seems, is the sense in which petitioners are using it now. This is a grave error. “Self-serving evidence” is not to be taken literally to mean any evidence that serves its proponent’s interest. The term, if used with any legal sense, refers only to acts or declarations made by a party in his own interest at some place and time out of court x x x.   (Citations omitted; emphasis supplied.)

Verily, the USAID certification cannot be said to be self-serving because it does not refer to an act or declaration made out of court by the heirs themselves as parties to this case. 

Clearly, the CA erred in deleting the award for lost income on the ground that the USAID Certification supporting such claim is self-serving and unreliable.  On the contrary, we find said certification sufficient basis for the court to make a fair and reasonable estimate of Jose Marcial’s loss of earning capacity just like in Tamayo v. Señora[52] where we based the victim’s gross annual income on his pay slip from the Philippine National Police.  Hence, we uphold the trial court’s award for Jose Marcial’s loss of earning capacity.

            While the trial court applied the formula generally used by the courts to determine net earning capacity which is, to wit:

Net Earning Capacity =  life expectancy* x (gross annual income  –  reasonable living expenses),[53]

*Life expectancy = 2/3 (80 – age of the deceased)

we, however, find incorrect the amount of P6,537, 244.96 arrived at.  The award should be P6,611,634.59 as borne out by the following computation:

3

 

Net earning capacity           =             2 (80-36[54]) x 450, 844.49[55]-50%[56]

3

 

=             88 x 225,422.25

                                                =             29.33 x 225,422.25

                                                =             P6, 611,634.59

The award of moral damages should be modified

 

 

            While we deemed it proper to modify the amount of moral damages awarded by the trial court as discussed below, we nevertheless agree with the heirs that the CA should not have pegged said award in proportion to the award of exemplary damages. Moral and exemplary damages are based on different jural foundations.[57]  They are different in nature and require separate determination.[58]  The amount of one cannot be made to depend on the other.

            In Victory Liner Inc. v. Gammad[59] we awarded P100,000.00 by way of moral damages to the husband and three children of the deceased, a 39-year old Section Chief of the Bureau of Internal Revenue, to compensate said heirs for the grief caused by her death.  This is pursuant to the provisions of Articles 1764 and 2206(3) which provide:

                Art. 1764.  Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages.  Articles 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

                Art. 2206.  x x x

                (3) The spouse, legitimate and illegitimate descendants and the ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.

Here, there is no question that the heirs are likewise entitled to moral damages pursuant to the above provisions, considering the mental anguish suffered by them by reason of Jose Marcial’s untimely death, as can be deduced from the following testimony of his wife Ruby:

 

Atty. Suarez:

                        Q:           How would you describe Jose Marcial Ochoa?

(Ruby)   A:           My husband was a very loving husband, faithful husband, a very [good] provider[.]  I depended on him so much financially [and] emotionally[.]  He was practically my life then.

Q:           How is he as a father?

A:           A very good father, he is very committed to Micaela[. H]e has always time for her[. H]e is a family man, so it’s really a great [loss] to me and to Micaela.

Q:           What was your reaction upon learning of your husband’s death?

A:           Immediately after I learned of his death, I tried very hard to keep a clear mind for my little girl, she was 3 ½ and she could not grasp what death is, so I found [it] so hard to explain to her [at] that time what happened [e]specially [because] she just talked to her father from the airport telling her that he is coming home, tapos hindi na pala.

Q:           How did it affect you?

A:           It was a painful struggle everyday just to get up and move on when someone who [you] really really love and [who] is important to you … it is very hard to move on and [it is even] harder to move on [when] I found out that I was pregnant with my second child, parang tinabunan ka [ng] lahat eh[.  I]t’s [too] hard to find happiness, you’re pregnant, when you know wala naman talagang father yung bata later on x x x

                x x x x

Q:           How did this affect your family?

A:           Yung effect kay Micaela, she [used] to be a gregarious child, yung happy ganyan, but nung wala na yong father niya that time, [during] graduation ng nursery that time naging very very [quiet] siya, so a lot of emotional support from my own family was given to her at the time para makacope-up siya sa loss kasi she is very close to the father.

Q:           Financially, how did it affect you?

A:           I had to make do of what was left by my husband, I couldn’t also work so much at the time because I was….and hirap eh, I cannot find enthusiasm in what I do, tapos pregnant pa ako, and hirap talaga.

Q:           How else did it affect you?

A:           We had to move houses like we used to live in Quezon City at (the) time of his death, tapos kinuha kami ni Gorjie my brother-in-law sa compound nila para hindi… [to] support us emotionally (at that time) kasi nga I was pregnant and then I also decided to move (to make it easy for me) to adjust yung lifestyle ng mga bata, because I cannot cope [here] financially on my own[. N]ahihirapan na ako dito because the living expenses here are quite high compared sa probinsiya so I decided to move.

Q:           If you would assign that pain and suffering that you suffered as a result of the death of your husband, what will be the monetary consideration?

A:           I struggled with that kasi….I can honestly say no amount of money can ever repay the [loss] that my children suffered, future nila yan eh, and my son was not given a chance to get to know his father, so I cannot imagine kung ano yung sinasabi n’yong amount that will compensate the suffering that I have to go through and my children will go through, ‘yon and mahirap bayaran.[60]

Under this circumstance, we thus find as sufficient and “somehow proportional to and in approximation of the suffering inflicted”[61] an award of moral damages in an amount similar to that awarded in Victory which is P100,000.00.

From the above discussion, we, thus, partly grant the heirs’ petition.

WHEREFORE, the petition for review on certiorari in G.R. No. 170071 is PARTLY GRANTED while the petition in G.R. No. 170125 is DENIED.  The assailed Decision and Resolution dated June 29, 2005 and October 12, 2005 of the Court of Appeals in CA-G.R. CV No. 75602 are AFFIRMED with the MODIFICATIONS that G & S is ordered to pay the heirs of Jose Marcial K. Ochoa the sum of  P6,611,634.59 for loss of earning capacity of the deceased and P100,000.00 as moral damages.

            SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

 

 

WE CONCUR:

 

 

RENATO C. CORONA

Chief Justice

Chairperson

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

 

                                               

JOSE PORTUGAL PEREZ

Associate Justice

 

 

 

 

 

 

 

C E R T I F I C A T I O N

 

            Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

 

RENATO C. CORONA

Chief Justice


[1]       CA rollo, pp. 216-233; penned by Associate Justice Vicente S.E. Veloso and concurred in by Associate Justices Roberto A. Barrios and Amelita G. Tolentino.

[2]       Id. at 309.

[3]       RTC Decision dated December 7, 2001; penned by Judge Librado S. Correa, records, pp. 298-303.

[4]       Id. at 18-19.

[5]       Id. at 1-8.

[6]       Art. 2180 – The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible.

                x x x x

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.

x x x x

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.

[7]       Art. 2176 – Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.  Such fault or negligence, if there is no preexisting contractual relation between the parties, is called quasi-delict x x x.

[8]       Recordspp. 48-54.

[9]       Id. at 298-303.

[10]     Id. at 303.

[11]     Id. at 307-308

[12]     Id. at 316-323.

[13]     Art. 1764 – Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages.  Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

[14]     Art. 2206 – The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition:

                x x x x

                (3)  The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral  damages for mental anguish by reason of the death of the deceased.

[15]     Records,. 331-341.

[16]     Id. at 342-343.

[17]     Id. at 343.

[18]     Id. at 344-346.                         

[19]     Id. at 353.

[20]     Decision of the Metropolitan Trial Court (MTC)-Quezon City, Branch 39 in Criminal Case No. 0011769 for Reckless Imprudence Resulting in Homicide, CA rollo, pp. 112-120. However, this MTC Decision was later reversed and set aside by the RTC, Quezon City, Branch 222 in Criminal Case No. Q03-118524 on December 11, 2003 where Padilla was accordingly acquitted; id. at 194-200.

[21]     Id. at 216-233.

[22]     Records, p. 150.

[23]     383 Phil. 30, 46 (2000).

[24]     G & S’ Motion for Reconsideration, CA rollo, pp. 240-249 and the heirs’ Motion for Partial Reconsideration, id. at 250-263.

[25]     Id. at 309.

[26]     Rollo of G.R. No. 170071, pp. 114-115 and rollo of G.R. No. 170125, pp. 6-7.

[27]     Rollo of G.R. No. 170125, p. 16.

[28]     Rollo of G.R. No. 170071, pp. 11-12.

[29]     A reading of Ereño, however, reveals that it was the victim’s mother, not the spouse, who submitted a handwritten statement of her daughter’s daily income and claimed for the award for lost income.

[30]     476 Phil373, 389 (2004).

[31]     316 Phil. 210, 225 (1995).

[32]     481 Phil. 550, 561-562 (2004).

[33]     Id. at 563.

[34]     Rollo of G.R. No. 170125, pp. 273-298; rollo of G.R. No. 170071, pp. 168-195.

[35]     The rule that a petition for review on certiorari should raise only questions of law admits of exceptions, among which are: (1) when the findings are grounded entirely on speculations, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondents; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record, Marquez v. Espejo. G.R. No. 168387,August 25, 2010.

[36]     G.R. No. 168475, July 4, 2007, 526 SCRA 440, 460-461.

[37]     CIVIL CODE, Article 1755.

[38]     Diaz v. Court of Appeals, G.R. No. 149749, July 25, 2006, 496 SCRA 468, 472.

[39]     440 Phil29, 40 (2002).

[40]     Spouses Caoili v. Court of Appeals, 373 Phil. 122, 131 (1999).

[41]     Meneses v. Court of Appeals, supra note 31.

[42]     Id.

[43]     419 Phil. 435, 443 (2001).

[44]     448 Phil. 78, 97 (2003).

[45]     Supra note 30.

[46]     486 Phil. 574, 591 (2004).

[47]     G.R. No. 169425, March 4, 2008, 547 SCRA 598, 615-616.

[48]     USAID: About USAID, Last updated on December 8, 2010,http://www.usaid.gov/(visited February 4, 2011).

[49]     Id.

[50]     RULES OF COURT, Rule 131, Sec. 3(m).

[51]     G.R. No. 155508, September 11, 2006, 501 SCRA 405, 416.           

[52]     G.R. No. 176946, November 15, 2010.

[53]     Id.

[54]     Jose Marcial’s age at the time of his death.

[55]     Jose Marcial’s annual income per Certification from USAID.

[56]     If there is no proof of living expenses, as in this case, the net income is estimated to be 50% of the gross annual income, People v. Templo, 400 Phil. 471, 494 (2000).

[57]     Victory Liner Inc. v. Gammad, supra note 46 at 592-593.

[58]     Id.

[59]     Id.

[60]     TSN, May 12, 2000, pp. 18-21.

[61]     Go v. Cordero, G.R. Nos. 164703 &164747, May 4, 2010.

CASE NO. 2011-0080: ASIA UNITED BANK, CHRISTINE T. CHAN, AND FLORANTE C. DEL MUNDO VS. GOODLAND COMPANY, INC. (G.R. NO.  191388, 9 MARCH 2011, DEL CASTILLO, J.) SUBJECT: FORUM SHOPPING. 2 CASES DISMISSED ON GROUND OF FORUM SHOPPING. (BRIEF TITLE: ASIA UNITED BANK ET AL VS. GOODLAND). 

   

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

ASIA UNITED BANK, CHRISTINE T. CHAN, and FLORANTE C. DEL MUNDO,   G.R. No.  191388

 

Present:

     Petitioners,    
    CORONA, C. J., Chairperson,

VELASCO, JR.,

    LEONARDO-DE CASTRO,
                           - versus -   DEL CASTILLO, and
 

 

  PEREZ, JJ.
     
GOODLAND COMPANY, INC.,   Promulgated:
 Respondent.    March 9, 2011

x – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

 

D E C I S I O N

DEL CASTILLO, J.:

            The costly consequence of forum shopping should remind the parties to ever be mindful against abusing court processes.

            Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court assailing the Decision[2] dated June 5, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 90114, as well as its Resolution[3] dated February 17, 2010, which denied a reconsideration of  the  assailed  Decision.   The dispositive portion

of the appellate court’s Decision reads:

                WHEREFORE, the appeal is GRANTED and the appealed Order dated March 15, 2007 is REVERSED and SET ASIDE.  In lieu thereof, another is entered ordering the DENIAL of appellee bank’s motion to dismiss and directing the REINSTATEMENT of appellant’s complaint as well as the REMAND of the case to the trial court for further proceedings.

 

SO ORDERED.[4]

Factual Antecedents

 

            Respondent Goodland Company, Inc. (Goodland) executed a Third Party Real Estate Mortgage (REM) over two parcels of land located in the Municipality of Sta. Rosa, Laguna and covered by Transfer Certificates of Title (TCT) Nos. 321672[5] and 321673[6] in favor of petitioner Asia United Bank (AUB).  The mortgage secured the obligation amounting to P250 million of Radiomarine Network, Inc. (RMNI), doing business as Smartnet Philippines, to AUB.  The REM was duly registered on March 8, 2001 in the Registry of Deeds of Calamba, Laguna.[7] 

            Goodland then filed a Complaint[8] docketed as Civil Case No. B-6242 before Branch 25 of the Regional Trial Court (RTC) of Biñan, Laguna for the annulment of the REM on the ground that the same was falsified and done in contravention of the parties’ verbal agreement (Annulment Case).   

            While the Annulment Case was pending, RMNI defaulted in the payment of its obligation to AUB, prompting the latter to exercise its right under the REM to extrajudicially foreclose the mortgage.  It filed its Application for Extrajudicial Foreclosure of Real Estate Mortgage under Act No. 3135, as amended with the Office of the Executive Judge of the RTC of Biñan, Laguna on October 19, 2006.[9]  The mortgaged properties were sold in public auction to AUB as the highest bidder.  It was issued aCertificate of Sale, which was registered with the Registry of Deeds of Calamba on November 23, 2006.

            Before AUB could consolidate its title, Goodland filed on November 28, 2006 another Complaint[10] docketed as Civil Case No. B-7110 before Branch 25 of the RTC of Biñan, Laguna, against AUB and its officers, petitioners Christine Chan and Florante del Mundo.  This Complaint sought to annul the foreclosure sale and to enjoin the consolidation of title in favor of AUB (Injunction Case).  Goodland asserted the alleged falsified nature of the REM as basis for its prayer for injunction. 

            A few days later,  AUB consolidated its ownership over the foreclosed properties and obtained new titles, TCT Nos. T-657031[11] and 657032,[12]in its name from the Registry of Deeds of Calamba.  

            Petitioners then filed on December 11, 2006 a Motion to Dismiss with Opposition to a Temporary Restraining Order in the Injunction Case.[13]  They brought to the trial court’s attention Goodland’s forum shopping given the pendency of the Annulment Case.  They argued that the two cases both rely on the alleged falsification of the real estate mortgage as basis for the reliefs sought. 

Ruling of the Regional Trial Court (Injunction Case)

            On March 15, 2007, the trial court acted favorably on petitioners’ motion and dismissed the Injunction Case with prejudice on the grounds of forum shopping and litis pendentia.[14]  The trial court explained that the Injunction Case and the Annulment Case are both founded on the same transactions, same essential facts and circumstances, and raise substantially the same issues. The addition of the application for a writ of preliminary injunction does not vary the similarity between the two cases.  The trial court further noted that Goodland could have prayed for injunctive relief as ancillary remedy in the Annulment Case.  Finally, the trial court stated that any judgment in the Annulment Case regarding the validity of the REM would constitute res judicata on the Injunction Case.

Ruling of the Court of Appeals[15] (Injunction Case)

 

            Goodland appealed[16] the same to the CA. 

            Meanwhile, AUB filed an Ex-Parte Application for Writ of Possession on December 18, 2006, which was granted on March 15, 2007.  The writ was issued on March 26, 2007 and AUB obtained possession of the foreclosed properties on April 2, 2007.

 

On June 5, 2009, the CA promulgated its assailed Decision, which ruled in favor of Goodland and ordered the reinstatement of the Injunction Case in the trial court.[17] 

            The CA rejected petitioners’ contention that Goodland’s appeal raised pure questions of law,[18] which are within the jurisdiction of the Supreme Court under Rule 45.[19]  Instead, it found Goodland’s Rule 41 appeal to be proper because it involvedboth questions of fact and of law.  The CA held that a question of fact existed because petitioners themselves questioned in their Brief the veracity of Goodland’s Certification of Non-Forum Shopping.[20]

The CA conceded that Goodland’s Brief failed to comply with the formal requirements, which are all grounds for the dismissal of the appeal,[21] e.g., failure of the appellant to serve and file the required number of copies of its brief on all appellees and absence of page references to the record.  However, it relaxed the rules so as to completely resolve the rights and obligations of the parties. The CA, however, warned Goodland that its future lapses will be dealt with more severely.[22]

            The CA further ruled against petitioners’ argument that the delivery of the foreclosed properties to AUB’s possession has rendered Goodland’s appeal moot. It explained that the Injunction Appeal involving the annulment of extrajudicial foreclosure sale can proceed independently of petitioners’ application for a writ of possession.[23] 

            The CA then concluded that Goodland was not guilty of forum shopping when it initiated the Annulment and Injunction Cases.  The CA held that the reliefs sought in the two cases were different.  The Annulment Case sought the nullification of the real estate mortgage, while the Injunction Case sought the nullification of the foreclosure proceedings as well as to enjoin the consolidation of title in favor of petitioners.[24]  The CA further held that aside from the difference in reliefs sought, the two cases were independent of each other because the facts or evidence that supported their respective causes of action were different.  The acts which gave rise to the Injunction Case (i.e., the extrajudicial foreclosure proceedings) occurred long after the filing of the Annulment Case.[25] 

            The appellate court also held that any decision in either case will not constitute res judicata on the other.  It explained that the validity of the real estate mortgage has no “automatic bearing” on the validity of the extrajudicial foreclosure proceedings.[26] 

            Moreover, according to the CA, the fact that Goodland stated in its Certification of Non-Forum Shopping in the Injunction Case that the Annulment Case was pending belied the existence of forum shopping.[27]

 

            Petitioners filed a Motion for Reconsideration[28] on July 2, 2009, which was denied in the assailed Resolution of February 17, 2010.[29]

            Hence, the instant petition.

Ruling in G.R. No. 190231 (Annulment Case)

 

            Contemporaneously with the proceedings of the Injunction Case, the earlier Annulment Case (Civil Case No. B-6242) was also dismissed by the trial court on the ground of forum shopping on August 16, 2007.[30] 

 

            Goodland filed an appeal[31] of the dismissal to the CA, which appeal was granted.  The CA ordered on August 11, 2009 the reinstatement of the Annulment Case in the trial court.[32]

            AUB then filed with this Court a Petition for Review,[33] docketed as G.R. No. 190231 and entitled Asia United Bank and Abraham Co v. Goodland Company, Inc

            On December 8, 2010, the Court’s First Division reversed the CA ruling and resolved the appeal in AUB’s favor.[34]  The sole issue resolved by the Court was whether Goodland committed willful and deliberate forum shopping by filing Civil Case Nos. B-6242 (Annulment Case) and B-7110 (Injunction Case).  The Court ruled that Goodland committed forum shopping because both cases asserted non-consent to the mortgage as the only basis for seeking the nullification of the REM, as well as the injunction of the foreclosure.  When Goodland did not notify the trial court of the subsequent filing of the injunction complaint, Goodland revealed its “furtive intent to conceal the filing of Civil Case No. B-7110 for the purpose of securing a favorable judgment.”  Thus, the Court concluded that the trial court was correct in dismissing the annulment case with prejudice. The dispositive portion of the said Resolution reads as follows:

                WHEREFORE, the petition is hereby GRANTED.  The August 11, 2009 decision and November 10, 2009 resolution of the Court of Appeals in CA-GR CV No. 9126[9] are REVERSED and SET ASIDE.  The August 16, 2007 and December 5, 2007 orders of the Regional Trial Court of Biñan, Laguna, Branch 25 in Civil Case No. B-6242 are REINSTATED.[35]

            Goodland filed a Motion for Reconsideration[36] but the same was denied with finality in the Court’s Resolution dated January 19, 2011.

Issue[37]

            The parties present several issues for the Court’s resolution.  Most of these address the procedural infirmities that attended Goodland’s appeal to the CA, making such appeal improper and dismissible.  The crux of the case, however, lies in the issue of whether the successive filing of the Annulment and Injunction Cases constitute forum shopping. 

Petitioners’ Arguments

 

            Petitioners maintain that Goodland is guilty of forum shopping because it sought in the Annulment Case to annul the REM on the ground that it was falsified and unlawfully filled-out; while in the Injunction Case, Goodland wanted to nullify the foreclosure sale arising from the same REM on the ground that the REM was falsified and unlawfully filled-out.  Clearly, Goodland’s complaints rise and fall on the issue of whether the REM is valid.  This requires the presentation of the same evidence in the Annulment and Injunction Cases.[38] 

Goodland’s Arguments

            Goodland counters that it did not commit forum shopping because the causes of action for the Injunction and Annulment Cases are different.  The Annulment Case is for the annulment of REM; while the Injunction Case is for the annulment of the extrajudicial foreclosure sale.  Goodland argues that any judgment in the Annulment Case, regardless of which party is successful, would not amount to res judicata in the Injunction Case.[39]

Our Ruling

 

            We grant the petition.

            There is forum shopping “when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.”[40]  The different ways by which forum shopping may be committed were explained in Chua v. Metropolitan Bank & Trust Company:[41]

                Forum shopping can be committed in three ways:  (1) filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause of action, but with different prayers (splitting causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

Common in these types of forum shopping is the identity of the cause of action in the different cases filed.  Cause of action is defined as “the act or omission by which a party violates the right of another.”[42]          

            The cause of action in the earlier Annulment Case is the alleged nullity of the REM (due to its allegedly falsified or spurious nature) which is allegedly violative of Goodland’s right to the mortgaged property.  It serves as the basis for the prayer for the nullification of the REM.  The Injunction Case involves the same cause of action, inasmuch as it also invokes the nullity of the REM as the basis for the prayer for the nullification of the extrajudicial foreclosure and for injunction against consolidation of title.  While the main relief sought in the Annulment Case (nullification of the REM) is ostensibly different from the main relief sought in the Injunction Case (nullification of the extrajudicial foreclosure and injunction against consolidation of title), the cause of action which serves as the basis for the said reliefs remains the same — the alleged nullity of the REM.  Thus, what is involved here is the third way of committing forum shopping, i.e., filing multiple cases based on the same cause of action, but with different prayers.  As previously held by the Court, there is still forum shopping even if the reliefs prayed for in the two cases are different, so long as both cases raise substantially the same issues.[43]

            There can be no determination of the validity of the extrajudicial foreclosure and the propriety of injunction in the Injunction Case without necessarily ruling on the validity of the REM, which is already the subject of the Annulment Case.  The identity of the causes of action in the two cases entails that the validity of the mortgage will be ruled upon in both, and creates a possibility that the two rulings will conflict with each other.  This is precisely what is sought to be avoided by the rule against forum shopping. 

The substantial identity of the two cases remains even if the parties should add different grounds or legal theories for the nullity of the REM or should alter the designation or form of the action.  The well-entrenched rule is that “a party cannot, by varying the form of action, or adopting a different method of presenting his case, escape the operation of the principle that one and the same cause of action shall not be twice litigated.”[44]

            The CA ruled that the two cases are different because the events that gave rise to them are different.  The CA rationalized that the Annulment Case was brought about by the execution of a falsified document, while the Injunction Case arose from AUB’s foreclosure based on a falsified document.  The distinction is illusory.  The cause of action for both cases is the alleged nullity of the REM due to its falsified or spurious nature.  It is this nullity of the REM which Goodland sought to establish in the Annulment Case. It is also this nullity of the REM which Goodland asserted in the Injunction Case as basis for seeking to nullify the foreclosure and enjoin the consolidation of title.  Clearly, the trial court cannot decide the Injunction Case without ruling on the validity of the mortgage, which issue is already within the jurisdiction of the trial court in the Annulment Case. 

            The recent development in Asia United Bank v. Goodland Company, Inc.,[45] which involved substantially the same parties and the same issue is another reason for Goodland’s loss in the instant case.  The issue that Goodland committed deliberate forum shopping when it successively filed the Annulment and Injunction Cases against AUB and its officers was decided with finality therein.  This ruling is conclusive on the petitioners and Goodland considering that they are substantially the same parties in that earlier case.

            Given our ruling above that the Injunction Case ought to be dismissed for forum shopping, there is no need to rule further on the procedural infirmities raised by petitioners against Goodland’s appeal. 

            WHEREFORE, premises considered, the Petition is GRANTED.  The June 5, 2009 Decision of the Court of Appeals and its February 17, 2010 Resolution in CA-G.R. CV No. 90114 are hereby REVERSED and SET ASIDE.  The March 15, 2007 Order of Branch 25 of the Regional Trial Court of Biñan, Laguna DISMISSING Civil Case No. B-7110 is hereby REINSTATED and AFFIRMED

SO ORDERED.

                                     MARIANO C. DEL CASTILLO

             Associate Justice

WE CONCUR:

 

RENATO C. CORONA

Chief Justice

Chairperson

 

 

 

 

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE CASTRO  

Associate Justice       

 

 

 

JOSE PORTUGAL PEREZ

Associate Justice

 

 

 

 

 

 

 

 

C E R T I F I C A T I O N

 

            Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

RENATO C. CORONA

Chief Justice


[1]       Rollo of G.R. No. 191388, pp. 44-95.  The prayer of the petition reads:

                WHEREFORE, petitioners respectfully pray that this Honorable Court REVERSE and SET ASIDE the assailed Decision dated 5 June 2009 and Resolution dated 17 February 2010 issued by the Court of Appeals in CA-G.R. CV No. 90114, and in lieu thereof, REINSTATE the Order dated 15 March 2007 of the Regional Trial Court of Biñan, Laguna, Branch 25, in Civil Case No. B-7110.

                Petitioners pray for such further or other reliefs as may be deemed just or equitable.  (Petition, p. 50; id. at 93).

[2]       Id. at 9-25; penned by Associate Justice Rebecca De Guia-Salvador and concurred in by Associate Justices Japar B. Dimaampao and Sixto C. Marella, Jr.

[3]       Id. at 27-32; penned by Associate Justice Rebecca De Guia-Salvador and concurred in by Associate Justices Japar B. Dimaampao and Normandie B. Pizzaro.

[4]       Id. at 24.

[5]       Id. at 516-520.

[6]       Id. at 521-525.

[7]       Id. at 518, 523.

[8]       Id. at 256-271.

[9]       Id. at 502-505. 

[10]     Id. at 282-306.

[11]     Id. at 599-602.

[12]     Id. at 603-606.

[13]     Id. at 370-431.

[14]     Id. at 916-917. The dispositive portion of the trial court’s Order states:

                WHEREFORE, finding the Motion to Dismiss filed by the defendants to be meritorious and well-taken, the same is hereby GRANTED.  Consequently, the above-entitled case is hereby ordered DISMISSED, with prejudice. 

                No costs.

                SO ORDERED.  (Id. at 917; penned by Acting  Presiding Judge Romeo C. De Leon.)

[15]     Id. at 9-25.

[16]     Id. at 958- 993.

[17]     Id. at 9-25.

[18]     RULES OF COURT, Rule 50, Section 2.  Dismissal of improper appeal to the Court of Appeals.  – An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court.  x x x

                An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.

[19]     RULES OF COURT, Rule 41, Section 2.  Modes of Appeal. –

                (a)  Ordinary appeal. –  x x x

                (b)  Petition for review.  – x x x

                (c)  Appeal by certiorari.  – In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.

[20]     Rollo of G.R. No. 191388, pp. 15-16.

[21]     RULES OF COURT, Rule 50, Section 1.  Grounds for dismissal of appeal.  – An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds:

                x x x x

                (e)  Failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these Rules;

                (f)  Absence x x x of page references to the record as required in section 13, paragraphs (a), (c), (d) and (f) of Rule 44.

[22]     Rollo of G.R. No. 191388, p. 16.

[23]     Id. at 17.

[24]     Id. at 18-22.

[25]     Id. at 22.

[26]     Id. at 22-23.

[27]     Id. at 24.

[28]     Id. at 123-158.

[29]     Id. at 27-32.

[30]     Id. at 1069-1074; penned by Presiding Judge Teodoro N. Solis. 

[31]     Id. at 1078-1105.

[32]     Rollo of G.R. No. 190231, pp. 40-51; penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by Associate Justices Celia C. Librea-Leagogo and Antonio L. Villamor.

[33]     Id. at 3-38.

[34]     Id. at 584-592.

[35]     Id. at 591.

[36]     Id. at 593-611.

[37]     Rollo of G.R. No. 191388, p. 60.

[38]     Id. at 67-81.

[39]     Id. at 1486.

[40]     Chua v. Metropolitan Bank & Trust Company, G.R. No. 182311, August 19, 2009, 596 SCRA 524, 535.   

[41]     Id. at 535-536.

[42]     RULES OF COURT, Rule 2, Section 2.

[43]     See Prubankers Association v. Prudential Bank and Trust Company, 361 Phil. 744, 756 (1999).

[44]     Ramos v. Pangasinan Transportation Company, Inc., 169 Phil. 172, 179 (1977).

[45]     G.R. No. 190231, supra note 34.

CASE NO. 2011-0079: HOME GUARANTY CORPORATION VS. R-II BUILDERS INC., AND NATIONAL HOUSING AUTHORITY (G.R. NO.  192649, 9 MARCH 2011, PEREZ, J.) SUBJECTS: JURISDICTION OF COURTS, HOW DETERMINED; FILING FEES IN CONNECTION WITH AMENDED COMPLAINT; CAN COURT WITHOUT JURISDICTION RE-RAFFLE CASE TO ANOTHER COURT? (BRIEF TITLE: HOME GUARANTY VS. R-11 BUILDERS ET AL.)

FIRST DIVISION

 

HOME GUARANTY CORPORATION,

                                       Petitioner,

 

 

 

 

 - versus -

R-II BUILDERS INC., and NATIONAL HOUSING AUTHORITY,

                                  Respondents. 

 

  G.R. No.  192649

 

 

 

Present:

CORONA, C. J.,

       Chairperson,

VELASCO, JR.,

LEONARDO DE-CASTRO,

DEL CASTILLO, and

PEREZ, JJ.

Promulgated:

March 9, 2011

x – – – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -x

D E C I S I O N

PEREZ, J.:

 

          Primarily assailed in this petition for review filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, is the Decision dated 21 January 2010 rendered by the Former Fifteenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 111153,[1] the dispositive portion of which states as follows:

            WHEREFORE, the petition for certiorari and prohibition is hereby DENIED.

            The assailed Orders, dated March 3, 2009 and September 29, 2009, of the Regional Trial Court of Manila, Branch 22 are hereby AFFIRMED.

            Consequently, the injunction earlier issued on December 4, 2009, restraining the proceedings in Civil Case No. 05-113407, is herebyDISSOLVED.[2]

The Facts

On 19 March 1993, a Joint Venture Agreement (JVA) was entered into between respondents National Housing Authority (NHA) and R-II Builders, Inc. (R-II Builders) for the implementation of the Smokey Mountain Development and Reclamation Project (SMDRP).   Amended and restated on 21 February 1994[3] and 11 August 1994,[4] the JVA was aimed at implementing a two-phase conversion of the Smokey Mountain Dumpsite “into a habitable housing project inclusive of the reclamation of the area across Radial Road 10 (R-10)”.[5]  By the terms of the JVA, R-II Builders, as developer, was entitled to own 79 hectares of reclaimed land and the 2.3 hectare commercial area at the Smokey Mountain.  As landowner/implementing agency, NHA, on the other hand, was entitled to own the 2,992 temporary housing units agreed to be built in the premises, the cleared and fenced incinerator site consisting of 5 hectares, 3,520 units of permanent housing to be awarded to qualified on site residents, the industrial area consisting of 3.2 hectares and the open spaces, roads and facilities within the Smokey Mountain Area.[6]

On 26 September 1994, NHA and R-II Builders, alongside petitioner Housing Guaranty Corporation (HGC) as guarantor and the Philippine National Bank (PNB) as trustee, entered into an Asset Pool Formation Trust Agreement which provided the mechanics for the implementation of the project.[7]  To back the project, an Asset Pool was created composed of the following assets: (a) the 21.2 hectare Smokey Mountain Site in Tondo, Manila; (b) the 79-hectare Manila Bay foreshore property in the name of the NHA; (c) the Smokey Mountain Project Participation Certificates (SMPPCs) to be issued, or their money proceeds; (d) disposable assets due to R-II Builders and/or its proceeds as defined in the JVA; (e) the resulting values inputted by R-II Builders for pre-implementation activities and some start-up works amounting to P300,000,000.00; (f) the 2,992 temporary housing facilities/units to be constructed by R-II Builders; and, (g) all pertinent documents and records of the project.[8]

On the same date, the parties likewise executed a Contract of Guaranty whereby HGC, upon the call made by PNB and conditions therein specified, undertook to redeem the regular SMPPCs upon maturity and to pay the simple interest thereon to the extent of 8.5% per annum.[9]  The foregoing agreements led to the securitization of the project through the issuance of 5,216 SMPPCs upon the Asset Pool, with a par value of 1 Million each, classified and to be redeemed by the trustee or, in case of call on its guaranty, by HGC, in the following order of priority:

a)  Regular SMPPCs worth P2.519 Billion, issued for value to the general public at specified interests and maturity dates.  These were to be redeemed by the PNB which was obliged to exhaust all liquid assets of the Asset Pool before calling on the HGC guarantee;

b) Special SMPPCs worth P1.403 Billion, issued exclusively to the NHA for conveyance of the Smokey Mountain Site and Manila Bay foreshore property to the Asset Pool, redeemable upon turnover of the developed project; and

c) Subordinated SMPPCs worth P1.294 Billion, issued exclusively to R-II Builders for its rights and interests in the JVA, redeemable with the turnover of all residual values, assets and properties remaining in the Asset Pool after both the Regular and Special SMPPCs are redeemed and all the obligations of the Asset Pool are settled.[10]

Subsequent to R-II Builders’ infusion of P300 Million into the project, the issuance of the SMPPCs and the termination of PNB’s services on 29 January 2001, NHA, R-II Builders and HGC agreed on the institution of Planters Development Bank (PDB) astrustee on 29 January 2001.[11]  By 24 October 2002, however, all the Regular SMPPCs issued had reached maturity and, unredeemed, already amounted to an aggregate face value of P2.513 Billion.  The lack of liquid assets with which to effect redemption of the regular SMPPCs  prompted PDB to make a call on HGC’s guaranty and to execute in the latter’s favor a Deed of Assignment and Conveyance (DAC) of the entire Asset Pool, consisting of: (a) 105 parcels of land comprising the Smokey Mountain Site and the Reclamation Area, with a total area of 539,471.47 square meters, and all the buildings and improvements thereon; (b) shares of stock of Harbour Centre Port Terminal, Inc. (HCPTI); and, (c) other documents.[12]

On 1 September 2005, R-II Builders filed the complaint against HGC and NHA which was docketed as Civil Case No. 05-113407 before Branch 24 of the Manila Regional Trial Court, a Special Commercial Court (SCC).  Contending that HGC’s failure to redeem the outstanding regular SMPPCs despite obtaining possession of the Asset Pool ballooned the stipulated interests and materially prejudiced its stake on the residual values of the Asset Pool, R-II Builders alleged, among other matters, that the DAC should be rescinded since PDB exceeded its authority in executing the same prior to HGC’s redemption and payment of the guaranteed SMPPCs; that while the estimated value of Asset Pool amounted to P5,919,716,618.62 as of 30 June 2005, its total liabilities was estimated at P2,796,019,890.41; and, that with the cessation of PDB’s functions as a trustee and HGC’s intention to use the Asset Pool to settle its obligations to the Social Security System (SSS), it was best qualified to be appointed as new trustee in the event of the resolution of the DAC. Assessed docket fees corresponding to an action incapable of pecuniary estimation, the complaint sought the grant of the following reliefs: (a) a temporary restraining order/preliminary and permanent injunction, enjoining disposition/s of the properties in the Asset Pool; (b) the resolution or, in the alternative, the nullification of the DAC; (c) R-II Builders’ appointment as trustee pursuant to Rule 98 of the Rules of Court; (d) HGC’s rendition of an accounting of the assets and the conveyance thereof in favor of R-II Builders; and, (e) P500,000.00 in attorney’s fees.[13]

On 26 October 2005, Branch 24 of the Manila RTC issued the writ of preliminary injunction sought by R-II Builders which, upon the challenge thereto interposed by HGC, was later affirmed by the CA in the 17 December 2007 decision rendered in CA-G.R. SP No. 98953.[14]  Having filed its answer to the complaint, in the meantime, HGC went on to move for the conduct of a preliminary hearing on its affirmative defenses which included such grounds as lack of jurisdiction, improper venue and the then pendency before this Court of G.R. No. 164537, entitled Francisco Chavez vs. National Housing Authority, et al., a case which challenged, among other matters, the validity of the JVA and its subsequent amendments.[15]  On 2 August 2007, R-II Builders, in turn, filed a motion to admit[16] its Amended and Supplemental Complaint which deleted the prayer for resolution of the DAC initially prayed for in its original complaint.  In lieu thereof, said pleading introduced causes of action for conveyance of title to and/or possession of the entire Asset Pool, for NHA to pay the Asset Pool the sum of P1,803,729,757.88 representing the cost of the changes and additional works on the project and for an increased indemnity for attorney’s fees in the sum of P2,000,000.00.[17]

Consistent with its joint order dated 2 January 2008 which held that R-II Builders’ complaint was an ordinary civil action and not an intra-corporate controversy,[18] Branch 24 of the Manila RTC issued a clarificatory order dated 1 February 2008 to the effect, among other matters, that it did not have the authority to hear the case.[19]  As a consequence, the case was re-raffled to respondent Branch 22 of the Manila RTC (respondent RTC) which subsequently issued the 19 May 2008 order which, having determined that the case is a real action, admitted the aforesaid Amended and Supplemental Complaint, subject to R-II Builders’ payment of the “correct and appropriate” docket fees.[20]  On 15 August 2008, however, R-II Builders filed a motion to admit it Second Amended Complaint, on the ground that its previous Amended and Supplemental Complaint had not yet been admitted in view of the non-payment of the correct docket fees therefor.[21]  Said Second Amended Complaint notably resurrected R-II Builders’ cause of action for resolution of the DAC, deleted its causes of action for accounting and conveyance of title to and/or possession of the entire Asset Pool, reduced the claim for attorney’s fees to P500,000.00, sought its appointment as Receiver pursuant to Rule 59 of the Rules of Court and, after an inventory in said capacity, prayed for approval of the liquidation and distribution of the Asset Pool in accordance with the parties’ agreements.[22] 

On 2 September 2008, HGC filed its opposition to the admission of R-II Builders’ Second Amended Complaint on the ground that respondent RTC had no jurisdiction to act on the case until payment of the correct docket fees and that said pleading was intended for delay and introduced a new theory inconsistent with the original complaint and the Amended and Supplemental Complaint.  Claiming that R-II Builders had defied respondent court’s 19 May 2008 order by refusing to pay the correct docket fees, HGC additionally moved for the dismissal of the case pursuant to Section 3, Rule 17 of the 1997 Rules of Civil Procedure.[23]  On 24 November 2008, R-II Builders also filed an Urgent Ex-Parte Motion for Annotation of Lis Pendens on the titles of the properties in the Asset Pool, on the ground that HGC had sold and/or was intending to dispose of portions thereof, in violation of the writ of preliminary injunction issued in the premises.[24]  Finding that jurisdiction over the case was already acquired upon payment of the docket fees for the original complaint and that the Second Amended Complaint was neither intended for delay nor inconsistent with R-II Builders’ previous pleadings, respondent RTC issued its first assailed order dated 3 March 2009 which: (a) denied HGC’s motion to dismiss; (b) granted R-II Builders’ motion to admit its Second Amended Complaint; and, (c) noted R-II Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens, to which the attention of the Manila Register of Deeds was additionally called.[25]

Undaunted, HGC filed its 22 March 2009 motion for reconsideration of the foregoing order, arguing that: (a) the case is real action and the docket fees paid by R-II Builders were grossly insufficient because the estimated value of properties in the Asset Poolexceeds P5,000,000,000.00; (b) a complaint cannot be amended to confer jurisdiction when the court had none; (c) the RTC should have simply denied the Urgent Ex-Parte Motion for Annotation of Lis Pendens instead of rendering an advisory opinion thereon.  In addition, HGC faulted R-II Builders with forum shopping, in view of its 10 September 2008 filing of the complaint docketed as Civil Case No. 08-63416 before Branch 91 of the Quezon City RTC, involving a claim for receivables from the NHA.[26]  In turn, R-II Builders opposed the foregoing motion[27] and, on the theory that the Asset Pool was still in danger of dissipation, filed an urgent motion to resolve its application for the appointment of a receiver and submitted its nominees for said position.[28]

On 29 September 2009, respondent RTC issued its second assailed order which (a) denied HGC’s motion for reconsideration; (b) granted R-II Builders’ application for appointment of receiver and, for said purpose: [i] appointed Atty. Danilo Concepcion as Receiver and, [ii] directed R-II Builders to post a bond in the sum of P10,000,000.00.[29]  Imputing grave abuse of discretion against the RTC for not dismissing the case and for granting R-II Builders’ application for receivership, HGC filed the Rule 65 petition for certiorari and prohibition docketed as CA-G.R. SP No. 111153 before the CA[30] which, thru its Former Special Fifteenth Division, rendered the herein assailed 21 January 2010 decision,[31] upon the following findings and conclusions: 

a)                 Irrespective of whether it is real or one incapable of pecuniary estimation, the action commenced by R-II Builders indubitably falls squarely within the jurisdiction of respondent RTC;

b)                From the allegations of R-II Builders’ original complaint and amended complaint the character of the relief primarily sought, i.e., the declaration of nullity of the DAC, the action before respondent RTC is one where the subject matter is incapable of pecuniary estimation;

c)                 R-II Builders need not pay any deficiency in the docket fees considering its withdrawal of its Amended and Supplemental Complaint;

d)                A receiver may be appointed without formal hearing, particularly when it is within the interest of both parties and does not result in the delay of any government infrastructure projects or economic development efforts;

e)                 Respondent RTC’s act of calling the attention of the Manila Registrar of Deeds to R-II Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens is well-within its residual power to act on matters before it; and

f)                  The withdrawal of R-II Builders’ Amended and Supplemental Complaint discounted the forum shopping imputed against it by HGC.[32] 

HGC’s motion for reconsideration of the foregoing decision[33] was denied for lack of merit in the CA’s resolution dated 21 June 2010, hence, this petition.

The Issues

 

          HGC urges the affirmative of the following issues in urging the grant of its petition, to wit:

“Did the Honorable Court of

Appeals Seriously Err When It

 Failed to Rule That:

 

I.                  The Regional Trial Court a quo had no jurisdiction to proceed with the case considering that:

 

(1)     the original court was without authority to hear the case and;

 

(2)     despite an unequivocal order from the trial court a quo,  Private Respondent (R-II Builders) failed and refused to pay the correct and proper docket fees, whether it be for a real or personal action, based on the values of the properties or claims subject of the complaints.

 

II.               Since the Honorable Court of Appeals had characterized the case as a personal action, the action before the Regional Trial Court a quo should have been dismissed for improper venue.

 

III.    The order appointing a receiver was made with grave abuse of discretion as amounting to lack of jurisdiction for having been issued under the following circumstances:

 

(1)             It was made without a hearing and without any evidence of its necessity;

 

(2)              It was unduly harsh and totally unnecessary in view of other available remedies, especially considering that Petitioner HGC is conclusively presumed to be solvent;

 

(3)             It effectively prevented the performance of HGC’s functions in recovering upon its guaranty exposure and was in contravention of Presidential Decree Nos. 385 and 1818, Republic Act No. 8927 and Supreme Court Circular Nos. 2-91, 13-93, 68-94 and Administrative Circular No. 11-00.”[34]

Acting on HGC’s motion for resolution of its application for a temporary restraining order and/or preliminary injunction,[35]the Court issued the resolution dated 23 August 2010, enjoining the enforcement of respondent RTC’s assailed orders.[36]

The Court’s Ruling

 

          We find the petition impressed with merit.

          Jurisdiction is defined as the authority to hear and determine a cause or the right to act in a case.[37]  In addition to being conferred by the Constitution and the law,[38] the rule is settled that a court’s jurisdiction over the subject matter is determined by the relevant allegations in the complaint,[39] the law in effect when the action is filed,[40] and the character of the relief sought irrespective of whether the plaintiff is entitled to all or some of the claims asserted.[41]  Consistent with Section 1, Rule 141 of theRevised Rules of Court which provides that the prescribed fees shall be paid in full “upon the filing of the pleading or other application which initiates an action or proceeding”, the well-entrenched rule is to the effect that a court acquires jurisdiction over a case only upon the payment of the prescribed filing and docket fees.[42] 

          The record shows that R-II Builders’ original complaint dated 23 August 2005 was initially docketed as Civil Case No. 05-113407 before Branch 24 of the Manila, a designated Special Commercial Court.[43]  With HGC’s filing of a motion for a preliminary hearing on the affirmative defenses asserted in its answer[44] and R-II Builders’ filing of its Amended and Supplemental Complaint dated 31 July 2007,[45] said court issued an order dated 2 January 2008 ordering the re-raffle of the case upon the finding that the same is not an intra-corporate dispute.[46]  In a clarificatory order dated 1 February 2008,[47] the same court significantly took cognizance of its lack of jurisdiction over the case in the following wise:

            At the outset, it must be stated that this Court is a designated Special Commercial Court tasked to try and hear, among others, intra-corporate controversies to the exclusion of ordinary civil cases.

            When the case was initially assigned to this Court, it was classified as an intra-corporate case.  However, in the ensuing proceedings relative to the affirmative defences raised by defendants, even the plaintiff conceded that the case is not an intra-corporate controversy or even if it is, this Court is without authority to hear the same as the parties are all housed in Quezon City.

            Thus, the more prudent course to take was for this Court to declare that it does not have the authority to hear the complaint it being an ordinary civil action.  As to whether it is personal or civil, this Court would rather leave the resolution of the same to Branch 22 of this Court. (Italics supplied).

We find that, having squarely raised the matter in its Rule 65 petition for certiorari and prohibition docketed as CA-G.R. SP No. 111153,[48] HGC correctly faults the CA for not finding that Branch 24 of the Manila RTC had no authority to order the transfer of the case to respondent RTC.[49]  Being outside the jurisdiction of Special Commercial Courts, the rule is settled that cases which are civil in nature, like the one commenced by R-II Builders, should be threshed out in a regular court.[50]  With its acknowledged lack of jurisdiction over the case, Branch 24 of the Manila RTC should have ordered the dismissal of the complaint, since a court without subject matter jurisdiction cannot transfer the case to another court.[51]  Instead, it should have simply ordered the dismissal of the complaint, considering that the affirmative defenses for which HGC sought hearing included its lack of jurisdiction over the case.

Calleja v. Panday,[52] while on facts the other way around, i.e., a branch of the RTC exercising jurisdiction over a subject matter within the Special Commercial Court’s authority, dealt squarely with the issue:

Whether a branch of the Regional Trial Court which has no jurisdiction to try and decide a case has authority to remand the same to another co-equal Court in order to cure the defects on venue and jurisdiction.

Calleja ruled on the issue, thus:

Such being the case, RTC Br. 58 did not have the requisite authority or power to order the transfer of the case to another branch of the Regional Trial Court.  The only action that RTC-Br. 58 could take on the matter was to dismiss the petition for lack of jurisdiction.

Certainly, the pronouncement of Br. 24, the Special Commercial Court, in its Joint Order of 2 January 2008 that the case is not an intracorporate controversy, amplified in its Order of 1 February 2008 that it “does not have the authority to hear the complaint it being an ordinary civil action” is incompatible with the directive for the re-raffle of the case and to “leave the resolution of the same to Branch 22 of this Court.”  Such a directive is an exercise of authority over the case, which authority it had in the same breath declared it did not have.  What compounds the jurisdictional error is the fact that at the time of its surrender of jurisdiction, Br. 24 had already acted on the case and had in fact, on 26 October 2005, issued the writ of preliminary injunction sought by herein respondent R-II Builders.  At that point, there was absolutely no reason which could justify a re-raffle of the case considering that the order that was supposed to have caused the re-raffle was not an inhibition of the judge but a declaration of absence of jurisdiction. So faulty was the order of re-raffle that it left the impression that its previously issued preliminary injunction remained effective since the case from which it issued was not dismissed but merely transferred to another court.  A re-raffle which causes a transfer of the case involves courts with the same subject matter jurisdiction; it cannot involve courts which have different jurisdictions exclusive of the other.  More apt in this case, a re-raffle of a case cannot cure a jurisdictional defect.           

Prescinding from the foregoing considerations, and to show that the proceedings below was error upon error, we find that the CA also gravely erred in not ruling that respondent RTC’s (Branch 22, the regular court)  jurisdiction over the case was curtailed by R-II Builders’ failure to pay the correct docket fees.  In other words, the jurisdictionally flawed transfer of the case from Branch 24, the SCC to Branch 22, the regular court, is topped by another jurisdictional defect which is the non-payment of the correct docket fees.  In its order dated 19 May 2008 which admitted R-II Builders’ Amended and Supplemental Complaint, respondent RTC distinctly ruled that the case was a real action and ordered the re-computation and payment of the correct docket fees.[53] In patent circumvention of said order, however, R-II Builders filed its 14 August 2008 motion to admit its Second Amended Complaint which effectively deleted its causes of action for accounting and conveyance of title to and/or possession of the entire Asset Pool and, in addition to reducing the claim for attorney’s fees and seeking its appointment as a receiver, reinstated its cause of action for resolution of the DAC.[54]  Acting on said motion as well as the opposition and motion to dismiss interposed by HGC,[55]respondent RTC ruled as follows in its assailed 3 March 2009 order,[56] to wit:

            1. The docket fees of the original complaint has been paid, thus, the Court already acquired jurisdiction over the instant case.  The admission of the Amended and Supplemental Complaint, is subject to the payment of docket fees pursuant to the Order of this Court dated May 18, 2008. The non-payment of the docket fees stated in the Order dated May 18, 2008 will result only in the non-admission of the Amended and Supplemental Complaint, which means that the Original Complaint remains.  However, since the Amended and Supplemental Complaint is being withdrawn and in lieu thereof a new Amended Complaint is sought to be admitted, there is no more need to pay the docket fees as provided for in the said Order.

            2.  It is settled that once jurisdiction is acquired and vested in a Court, said Court maintains its jurisdiction until judgment is had (Aruego, Jr., et al. vs. CA).  Such acquired jurisdiction is not lost by the amendment of a pleading that raises additional/new cause(s) of action.  The jurisdiction of a Court is not even lost even if the additional docket fees are required by reason of the amendment.

            Indeed, the Supreme Court held in PNOC vs. Court of Appeals (G.R. No. 107518, October 8, 1998) that:

            “Its failure to pay the docket fee corresponding to its increased claim for damages under the amended complaint should not be considered as having curtailed the lower court’s jurisdiction.  Pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, the unpaid docket fees should be considered as a lien on the judgment even though private respondent specified the amount of P600,000.00 as its claim for damages in its amended complaint.

            Thus, even on the assumption that additional docket fees are required as a consequence of any amended complaint, its non-payment will not result in the court’s loss of jurisdiction over the case.[57]

Distinctly, the principal reference remained to be the “original complaint,” in which R-II Builders itself submitted that the case “is a real action as it affects title and possession of real property or interest therein.”  It was precisely this submission which was the basis of the conclusion of the SCC court, Br. 24 that the case is not an intra-corporate controversy and therefore is outside its authority.

We see from the assailed Order that the regular court accepted the case on the reason that “the docket fees of the original complaint has been paid,” so that, furthermore, the Amended and Supplemental Complaint may be admitted “subject to the payment of docket fees.”  When the required fees were not paid, the court considered it as resulting in the non-admission of the Amended and Supplemental Complaint such that “the original complaint remains.”  That remaining original complaint can then be amended by “a new Amended Complaint” which is no longer subject to the conditions attached to the unadmitted Amended and Supplemental Complaint.

The Order of 3 March 2009, with its logic and reason, is wholly unacceptable.

In upholding the foregoing order as well as its affirmance in respondent RTC’s 29 September 2009 order,[58] the CA ruled that the case – being one primarily instituted for the resolution/nullification of the DAC – involved an action incapable of pecuniary estimation.  While it is true, however, that R-II Builder’s continuing stake in the Asset Pool is “with respect only to its residual value after payment of all the regular SMPPCs holders and the Asset Pool creditors”,[59] the CA failed to take into account the fact that R-II Builders’ original complaint and Amended and Supplemental Complaint both interposed causes of action for conveyance and/or recovery of possession of the entire Asset Pool.  Indeed, in connection with its second cause of action for appointment as trustee in its original complaint,[60] R-II Builders distinctly sought the conveyance of the entire Asset Pool[61] which it consistently estimated to be valued at P5,919,716,618.62 as of 30 June 2005.[62]  In its opposition to HGC’s motion to dismiss, R-II Builders even admitted that the case is a real action as it affects title to or possession of real property or an interest therein.[63]  With R-II Builders’ incorporation of a cause of action for conveyance of title to and/or possession of the entire Asset Pool in its Amended and Supplemental Complaint,[64] on the other hand, no less than respondent RTC, in its 19 May 2008 order, directed the assessment and payment of docket fees corresponding to a real action.

Admittedly, this Court has repeatedly laid down the test in ascertaining whether the subject matter of an action is incapable of pecuniary estimation by determining the nature of the principal action or remedy sought.  While a claim is, on the one hand, considered capable of pecuniary estimation if the action is primarily for recovery of a sum of money, the action is considered incapable of pecuniary estimation where the basic issue is something other than the right to recover a sum of money, the money claim being only incidental to or merely a consequence of, the principal relief sought.[65]  To our mind, the application of foregoing test does not, however, preclude the further classification of actions into personal actions and real action, for which appropriate docket fees are prescribed.  In contrast to personal actions where the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages, real actions are those which affect title to or possession of real property, or interest therein.[66]While personal actions should be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff,[67] the venue for real actions is the court of the place where the real property is located.[68]

Although an action for resolution and/or the nullification of a contract, like an action for specific performance, fall squarely into the category of actions where the subject matter is considered incapable of pecuniary estimation,[69] we find that the causes of action for resolution and/or nullification of the DAC was erroneously isolated by the CA from the other causes of action alleged in R-II Builders’ original complaint and Amended and Supplemental Complaint which prayed for the conveyance and/or transfer of possession of the Asset Pool.  In Gochan v. Gochan,[70] this Court held that an action for specific performance would still be considered a real action where it seeks the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance of real property.  More to the point is the case of Ruby Shelter Builders and Realty Development Corporation v. Hon. Pablo C. Formaran III[71] where, despite the annulment of contracts sought in the complaint, this Court upheld the directive to pay additional docket fees corresponding to a real action in the following wise, to wit:

x x x [I]n Siapno v. Manalo, the Court disregarded the title/denomination of therein plaintiff Manalo’s amended petition as one for Mandamus with Revocation of Title and Damages; and adjudged the same to be a real action, the filing fees for which should have been computed based on the assessed value of the subject property or, if there was none, the estimated value thereof. The Court expounded in Siapno that:

In his amended petition, respondent Manalo prayed that NTA’s sale of the property in dispute to Standford East Realty Corporation and the title issued to the latter on the basis thereof, be declared null and void. In a very real sense, albeit the amended petition is styled as one for “Mandamus with Revocation of Title and Damages”, it is, at bottom, a suit to recover from Standford the realty in question and to vest in respondent the ownership and possession thereof. In short, the amended petition is in reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, we said:

A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)

An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner’s primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action.[72]

          Granted that R-II Builders is not claiming ownership of the Asset Pool because its continuing stake is, in the first place, limited only to the residual value thereof, the conveyance and/or transfer of possession of the same properties sought in the original complaint and Amended and Supplemental Complaint both presuppose a real action for which appropriate docket fees computed on the basis of the assessed or estimated value of said properties should have been assessed and paid.   In support of its original complaint’s second cause of action for appointment as trustee and conveyance of the properties in the Asset Pool, R-II Builders distinctly alleged as follows:

            5.12. As the Court-appointed Trustee, R-II Builders shall have and exercise the same powers, rights and duties as if [it] had been originally appointed, having the principal duty of redeeming and buying back the Regular SMPPC’s and thereafter liquidating the Asset Pool, which are also the end goals of the Agreement.

5.12.1. R-II Builders, as the Trustee, shall have the power and right to invest, transfer, convey or assign any of the assets of the Asset Pool, whether funds, receivables, real or personal property, in exchange for shares of stocks, bonds, securities, real or personal properties of any kind, class or nature, provided that any such investment, transfer, conveyance or assignment shall not impair the value of the Asset Pool.

5.12.2. R-II Builders, as the Trustee, shall have the power and right to sell, change, assign or otherwise dispose of any stocks, bonds, securities, real or personal properties or other assets constituting the Asset Pool.

5.12. 3. R-II Builders, as the Trustee, shall have the power and right to enter into lease agreements as lessor or any other related contract for the benefit of the Asset Pool; and

5.12.4. It is understood that the aforecited powers and rights of R-II Builders as the court-appointed Trustee, are non-exclusive; and is deemed to include all the rights and powers necessary and incidental to achieve the goals and objectives of the Agreement.[73]

From the foregoing allegations in its original complaint, it cannot be gainsaid that R-II Builders was unquestionably seeking possession and control of the properties in the Asset Pool which predominantly consisted of real properties.  Having admitted that “the case is a real action as it affects title to or possession of real property or (an) interest therein”,[74] R-II Builders emphasized the real nature of its action by seeking the grant of the following main reliefs in the Amended and Supplemental Complaint it subsequently filed, to wit:

5.  After trial on the merits, render judgment:

(i) Declaring the annulment of the Deed of Assignment and conveyance executed by PDB in favor of HGC; or in the alternative, declaring the nullity of the said instrument;

(ii) Appointing R-II Builders as the Trustee of the Asset Pool Properties, with powers and responsibilities including but not limited to those stated in 5.12.1, 5.12.2, 5.12.3 and 5.12.4 herein and those spelled out in the Re-Stated Smokey Mountain Asset Pool Formation Trust Agreement;

(iii) Ordering HGC to render an accounting of all properties of the Asset Pool transferred thereto under the Deed of Assignment and Conveyance and thereafter convey title to and/or possession of the entire Asset Pool to R-II Builders as the Trustee thereof which assets consist of, but is not limited to the following:

(a)  105 parcels of land comprising the Smokey Mountain Site, and, the Reclamation Area, consisting of the 539,471.47 square meters, and all the buildings and improvements thereon, with their corresponding certificates of title;

(bshares of stock of Harbour Center Port Terminal, Inc. which are presently registered in the books of the said company in the name of PDB for the account of the Smokey Mountain Asset Pool; and

(cother documents as listed in Annex E of the Contract of Guaranty.

(ivOrdering NHA to pay the Asset Pool the amount of Php1,803,729,757.88 including the direct and indirect cost thereon as may be found by this Honorable Court to be due thereon;

(v) Making the injunction permanent;

(vi) Ordering HGC and the NHA to pay Attorney’s fees in the amount of P2,000,000 and the costs of suit.[75]

For failure of R-II Builders to pay the correct docket fees for its original complaint or, for that matter, its Amended and Supplemental Complaint as directed in respondent RTC’s 19 May 2008 order, it stands to reason that jurisdiction over the case had yet to properly attach.  Applying the rule that “a case is deemed filed only upon payment of the docket fee regardless of the actual date of filing in court” in the landmark case of Manchester Development Corporation v. Court of Appeals,[76] this Court ruled that jurisdiction over any case is acquired only upon the payment of the prescribed docket fee which is both mandatory and jurisdictional.  To temper said ruling, the Court subsequently issued the following guidelines in Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion,[77] viz.:

          1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.

            2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period.

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

True to the foregoing guidelines, respondent RTC admitted R-II Builder’s Amended and Supplemental Complaint and directed the assessment and payment of the appropriate docket fees in the order dated 19 May 2008.  Rather than complying with said directive, however, R-II Builders manifested its intent to evade payment of the correct docket fees by withdrawing its Amended and Supplemental Complaint and, in lieu thereof, filed its Second Amended Complaint which deleted its cause of action for accounting and conveyance of title to and/or possession of the entire Asset Pool, reduced its claim for attorney’s fees, sought its appointment as Receiver and prayed for the liquidation and distribution of the Asset Pool.[78] In upholding the admission of saidSecond Amended Complaint in respondent RTC’s assailed 3 March 2009 Order, however, the CA clearly lost sight of the fact that a real action was ensconced in R-II Builders’ original complaint and that the proper docket fees had yet to be paid in the premises. Despite the latter’s withdrawal of its Amended and Supplemental Complaint, it cannot, therefore, be gainsaid that respondent RTC had yet to acquire jurisdiction over the case for non-payment of the correct docket fees.

In the 15 February 2011 Resolution issued in the case of David Lu v. Paterno Lu Ym, Sr.,[79] this Court, sitting En Banc, had occasion to rule that an action for declaration of nullity of share issue, receivership and corporate dissolution is one where the value of the subject matter is incapable of pecuniary estimation.  Subsequent to the trial court’s rendition of a decision on the merits declared to be immediately executory and the CA’s denial of their application for a writ of preliminary injunction and/or temporary restraining order to enjoin enforcement of said decision, the defendants questioned the sufficiency of the docket fees paid a quowhich supposedly failed take into consideration the value of the shares as well as the real properties involved for which the plaintiff additionally caused notices of lis pendens to be annotated.  Finding that defendants were already estopped in questioning the jurisdiction of the trial court on the ground of non-payment of the correct docket fees, the Court discounted intent to defraud the government on the part of the plaintiff who can, at any rate, be required to pay the deficiency which may be considered a lien on the judgment that may be rendered, without automatic loss of the jurisdiction already acquired, in the first instance, by the trial court.       

The factual and legal milieus of the case at bench could not, however, be more different.  While R-II Builders styled its original complaint and Amended and Supplemental Complaint as one primarily for the resolution and/or declaration of the DAC, it simultaneously and unmistakably prayed for the conveyance, possession and control of the Asset Pool.  Alongside the fact that HGC has consistently questioned the sufficiency of the docket fees paid by R-II Builders, estoppel cannot be said to have set in since, the lapse of more than five years from the commencement of the complaint notwithstanding, it appears that the case has yet to be tried on the merits.  Having admitted that its original complaint partook the nature of a real action and having been directed to pay the correct docket fees for its Amended and Supplemental Complaint, R-II Builders is, furthermore, clearly chargeable with knowledge of the insufficiency of the docket fees it paid.   Unmistakably manifesting its intent to evade payment of the correct docket fees, moreover, R-II Builders withdrew its Amended and Supplemental Complaint after its admission and, in lieu thereof, filed its’Second Amended Complaint on the ground that said earlier pleading cannot be considered admitted in view of its non-payment of the docket and other fees it was directed to pay.  In so doing, however, R-II Builders  conveniently overlooked the fact that the very same argument could very well apply to its original complaint for which – given its admitted nature as a real action – the correct docket fees have also yet to be paid.

The importance of filing fees cannot be over-emphasized for they are intended to take care of court expenses in the handling of cases in terms of costs of supplies, use of equipment, salaries and fringe benefits of personnel, and others, computed as to man-hours used in the handling of each case.  The payment of said fees, therefore, cannot be made dependent on the result of the action taken without entailing tremendous losses to the government and to the judiciary in particular.[80]  For non-payment of the correct docket fees which, for real actions, should be computed on the basis of the assessed value of the property, or if there is none, the estimated value thereof as alleged by the claimant,[81] respondent RTC should have denied admission of R-II Builders’ Second Amended Complaint and ordered the dismissal of the case.  Although a catena of decisions rendered by this Court eschewed the application of the doctrine laid down in the Manchester case,[82] said decisions had been consistently premised on the willingness of the party to pay the correct docket fees and/or absence of intention to evade payment of the correct docket fees.  This cannot be said of R-II Builders which not only failed to pay the correct docket fees for its original complaint and Amended and Supplemental Complaint but also clearly evaded payment of the same by filing its Second Amended Complaint.

By itself, the propriety of admitting R-II Builders’ Second Amended Complaint is also cast in dubious light when viewed through the prism of the general prohibition against amendments intended to confer jurisdiction where none has been acquired yet. Although the policy in this jurisdiction is to the effect that amendments to pleadings are favored and liberally allowed in the interest of justice, amendment is not allowed where the court has no jurisdiction over the original complaint and the purpose of the amendment is to confer jurisdiction upon the court.[83]  Hence, with jurisdiction over the case yet to properly attach, HGC correctly fault the CA for upholding respondent RTC’s admission of R-II Builders’ Second Amended Complaint despite non-payment of the docket fees for its original complaint and Amended and Supplemental Complaint as well as the clear intent to evade payment thereof.

With the determination  of the jurisdictional necessity of the dismissal of the complaint of R-II Builders docketed as Civil Case No. 05-113407, first before Br. 24 and later before Br. 22 both of the RTC of Manila, we no longer find any reason to go into a discussion of the remaining issues HGC proffers for resolution.  In view, particularly, of its non-acquisition of jurisdiction over the case, respondent RTC clearly had no authority to grant the receivership sought by R-II Builders.  It needs pointing out though that the prayer for receivership clearly indicates that the R-II Builders sought the transfer of possession of property consisting of the assets of the JVA from HGC to the former’s named Receiver.  As already noted, said transfer of possession was sought by respondent R-II Builders since the very start, overtly at the first two attempts, covertly in the last, the successive amendments betraying the deft maneuverings to evade payment of the correct docket fees.

WHEREFORE, premises considered, the assailed Decision dated 21 January 2010 is REVERSED and SET ASIDE.  In lieu thereof, another is entered NULLIFYING the regular court’s, RTC Branch 22’s Orders dated 3 March 2009 and 29 September 2009 as well as the SCC’s, RTC Branch 24’s Order dated 26 October 2005 which was rendered void by the SCC’s subsequent declaration of absence of authority over the case.  The complaint of R-II Builders docketed as Civil Case No. 05-113407 first before Br. 24 and thereafter before Br. 22 both of the RTC of Manila is hereby DISMISSED.

           SO ORDERED.

 

 

 

                                                                      JOSE PORTUGAL PEREZ

                                                                                     Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

 

 

 

 

 

PRESBITERO J. VELASCO, JR.

Associate Justice

 

 

 

 

 

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

 

MARIANO C. DEL CASTILLO

Associate Justice

 

 

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                                      RENATO C. CORONA

                                                                                Chief Justice


[1]               Rollo, pp.  139-165.

[2]               Id. at 165.

[3]               Id. at 1063-1077.

[4]               Id. at 1078-1087.

[5]               Id. at 1063.

[6]               Id. at 1068-1069.

[7]               Id. at 1088.

[8]               Id. at 19-20 and 1094.

[9]               Id. at 1112-1117.

[10]             Id. at 20-22, 354, 142-143 and 505.

[11]             Id. at 22 and 356.

[12]             Id. at 1118-1119.

[13]             Id. at 348-376.    

[14]             Id. at 24 and 146.

[15]             Id. at 1416-1423.

[16]             Id. at 440-445.

[17]             Id. at 446-489.

[18]             Id. at 435-437.

[19]             Id. at 438-439.

[20]             Id. at 490-495.

[21]             Id. at 496-500.

[22]             Id. at 496-538.

[23]             Id. at 539-549.

[24]             Id. at 585-590.

[25]             Id. at 325-332.

[26]             Id. at 613-656.

[27]             Id. at 775-793.

[28]             Id. at 823-827.

[29]             Id. at 333-347.

[30]             Id. at 178-313.

[31]             Id. at 139-165.

[32]             Id. at 154-165.

[33]             Id. at 1375-1415.

[34]             Id. at 40-41.

[35]             Id. at 1451-1484.

[36]             Id. at 1485-1488.

[37]             Union Bank of the Philippines v. Securities and Exchange Commission, G.R. No. 165382, 17 August 2006, 499 SCRA 253, 263.

[38]             Proton Pilipinas Corporation v. Republic, G.R. No. 165027, 16 October 2006, 504 SCRA 528, 540.

[39]             General Milling Corporation v. Uytengsu III, G.R. No. 160514, 30 June 2006, 494 SCRA 241, 245.

[40]             Bokingo v. Court of Appeals, G.R. No. 161739, 4 May 2006, 489 SCRA 521, 530.

[41]             AC Enterprises, Inc. v. Frabelle Properties Corporation, G.R. No. 166744, 2 November 2006, 506 SCRA 625, 654-655.

[42]             Lacson v. Reyes, G.R. No. 86250, 26 February 1990, 182 SCRA 729, 733.

[43]             Rollo, pp. 348-377.            

[44]             Id. at 1416-1423.

[45]             Id. at 446-487.

[46]             Id. at 435-437.

[47]             Id. at 438-439.

[48]             Id. at 211-217.

[49]             Id. at 41-47.

[50]             Atwell v. Concepcion Progressive Association, Inc., G.R. No. 169370, 14 April 2008, 551 SCRA 272, 281.

[51]             Igot v. Court of Appeals, G.R. No. 150794, 17 August 2004, 436 SCRA 668, 676.

[52]             G.R. No. 168696, 28 February 2006, 483 SCRA 680, 693.

[53]             Rollo, pp. 490-495.

[54]             Id. at 496-538.

[55]             Id. at 539-549.

[56]             Id. at 325-332.

[57]             Id. at 327-328.

[58]             Id. at 333-347.

[59]             Id. at 157-158.

[60]             Id. at 364-371.

[61]             Id. at 376.

[62]             Id. at 357-358.

[63]             Id. at 436.

[64]             Id. at 460-463.

[65]             Radio Communications of the Philippines, Inc. v. Court of Appeals, 435 Phil. 62, 66 (2002).

[66]             Marcos-Araneta v. Court of Appeals, G.R. No. 154096, 22 August 2008, 563 SCRA 41, 62-63.

[67]             Davao Light and Power Co, Inc. v. Court of Appeals, 415 Phil. 630-631 (2001).

[68]             Infante v. Aran Builders, Inc., G.R. No. 156596, 24 August 2007, 531 SCRA 123, 129-130.

[69]             Russel v. Hon. Augustine A. Vestil, 364 Phil. 392, 400 (1999).

[70]             423 Phil. 491, 501 (2001).

[71]             G.R. No. 175914, 10 February 2009, 578 SCRA 283.

[72]             Id. at 302-303.

[73]             Rollo, pp. 369-370.

[74]             Id. at 436.

[75]             Id. at 485-486.

[76]             233 Phil. 579, 584 (1987).

[77]             G.R. Nos. 79937-38, 13 February 1989, 170 SCRA 274, 285.

[78]             Rollo, pp. 501-538.

[79]             En Banc Resolution, G.R. Nos. 153690 and 157381.

[80]             Suson v. Court of Appeals, 343 Phil. 820, 825 (1997) citing Pilipinas Shell Petroleum Corp. v. Court of Appeals, 171 SCRA 674.

[81]             Serrano v. Delica, 503 Phil. 73, 77 (2005).

[82]             Negros Oriental Planters Association, Inc. v. Presiding Judge of RTC-Negros Occidental, Br. 52, Bacolod City, G.R. No. 179878, 24 December 2008, 575 SCRA 575, 587 ;Spouses Go v. Tong,   462 Phil. 256 (2003); Soriano v. Court of Appeals, 416 Phil. 226 (2001); Yambao v. Court of Appeals, 399 Phil. 712 (2000); Mactan Cebu International Airport Authority v. Mangubat, 371 Phil. 393, (1999) ; Ng Soon v. Hon. Alday, 258 Phil. 848 (1989).

[83]             Tirona v. Hon.  Alejo, 419 Phil. 285, 300 (2001).

Follow

Get every new post delivered to your Inbox.

Join 195 other followers