-        res judicata

·         Read Vda de Cruzo v Cariaga, 174 S 330

Facts:

Lot No. 1131 of the Misamis Cadastre, subject matter of this case, was originally registered in the name of Gabina Machoca, as her paraphernal property Petitioners herein are the children of the late spouses Leonardo Arcadio and said Gabina Machoca. Gabina Machoca mortgaged Lot No. 1131 for P425.00 to private respondent Franklin Ang and delivered to him her aforesaid certificate of title in connection therewith. Gabina again borrowed an additional sum of P175.00 from Ang as a result of which her total obligation to the latter was in the sum of P600.00. Petitioners claim that on the same date, Ang caused the preparation of a deed of sale over the subject lot to which document Gabina Machoca, being illiterate, affixed her thumb-mark in the belief that this second instrument was similar to the deed of mortgage executed by her on February 4, 1954. When Gabina went home, her children, herein petitioners, informed her that the second document was not a deed of mortgage but a contract of sale. Gabina went back to Ang and demanded the reformation of the aforesaid instrument. Franklin Ang, instead of reforming the instrument, prepared a deed of agreement. Pursuant to the provisions of said deed of agreement, Gabina’s right to repurchase the property was to expire on October 4, 1957, that is, three years from October 4, 1954 when the deed of sale was executed.

As early as June 10, 1955, however, Ang caused the registration of the deed of sale, resulting in the subsequent cancellation of Original Certificate of Title No. 682 and the consequent issuance of Transfer Certificate of Title No. T-161 for the same property in the name of Franklin Ang Ang sold said Lot No. 1131 to herein private respondent Melecio Suarez who then obtained Transfer Certificate of Title No. T-945 therefore in his name. [Vda. de Cruzo vs. Carriaga, Jr., 174 SCRA 330(1989)]

Issue:

Held:

·         City of Cebu v CA, 258 S 175

Facts: Merlita Cardeno owns a parcel of land at Sto. Nino, Alaska-Mambaling. The City of Cebu filed a complaint for eminent domain against her. The complaint was initiated through Res. # 404 and Ordinance No. 1418 of the SP Cebu authorizing the City Mayor to expropriate the said parcel of land for the purpose of providing a socialized housing project for the landless and low-income city residents. Private respondent filed MD the said complaint on the ground of lack of causes of action (COA). According to her, the allegations contained in pa.VII of the complaint, i.e., “That repeated negotiations had been made with the defendant to have the aforementioned property purchased by the plaintiff through negotiated sale without resorting to expropriation, but said negotiation failed” do not show compliance with one of the conditions precedent to the exercise of eminent domain as enunciated in RA 7160- “ x x x that the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted.” According to the petitioner, in its Comment and Opposition, offer was made through her lawyer.

RTC: dismissed the complaint – City has not complied with condition precedent; and where the ground for dismissal is that the complaint states no COA, its sufficiency can only be determined from the facts alleged in the complaint and no other

CA: affirmed . The term ‘negotiation’ may not be perceived to mean the valid and definite offer contemplated by law.

SC Held: It states COA. 1) a complaint should not be dismissed upon a mere ambiguity for this is not ground for MD but rather for a bill of particulars; 2) the CA and the RTC made an inflexible application of the rule when the an examination of the Comment and Opposition leaves no doubt on the petitioner’s

valid offer; 3) even on the face of the complaint, there is COA; d) a perusal of the copy of said ordinance shows that the fact of offer is categorically stated in therein.

Petition is granted.

-        Remedy in case of granting/denial of motion to dismiss

-        Order denying motion to dismiss is interlocutory, hence proper remedy is to appeal after a decision has been rendered

-        Order granting motion to dismiss disposes of the case hence, appeal under Rule 41 is applicable.

1.2.  Dismissal of Action (Rule 17)

Pinga v Heirs of Santiago GR 170354 June 30, 2006

Facts:

The Heirs of Santiago filed an injunction against Pinga alleging that Pinga had been unlawfully entering the coco lands of the respondent cutting wood and bamboos and harvesting the fruits of the coconut trees. As a counterclaim, Pinga contests the ownership of the lands to which Pinga was harvesting the fruits. However, due to failures of Heirs of Santiago to attend the hearings, the court ordered the dismissal of said case.

Respondents thus filed an MR not to reinstate the case but to ask for the entire action to be dismissed and not to allow petitioner to present evidence ex parte.

RTC granted the MR, hence the counterclaim was dismissed. RTC ruled that compulsory counterclaims cannot be adjudicated independently of plaintiff’s cause of action vis a vis the dismissal of the complaint carries with it the dismissal of the counterclaim.

Petitioner then elevates it to the SC by way of Rule 45 on pure questions of law. (Santiagos motive: They just asked for the dismissal of their entire case so that their ownership wouldn’t be put in controversy in the counterclaim)

Issue:

Whether or not dismissal of original complaint affects that of the compulsory counter claims?

Ruling:

NO the counterclaims, in this case, can stand on its own.

Rule 17 Sec 3 provides: “If for any cause, the plaintiff fails to appear on the date of his presentation of his evidence x x x the complaint may be dismissed upon motion of the defendant or upon the court’s own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action”The dismissal of the complaint does not carry with the dismissal of the counterclaim, compulsory or otherwise. In fact, the dismissal of the complaint is without prejudice to the right of defendants to prosecute his counterclaim. Section 3 contemplates a dismissal not procured by plaintiff, albeit justified by causes imputable to him and which, in the present case, was petitioner's failure to appear at the pre-trial.

This situation is also covered by Section 3, as extended by judicial interpretation, and is ordered upon motion of defendant or motu proprio by the court. Here, the issue of whether defendant has a pending counterclaim, permissive or compulsory, is not of determinative significance. The dismissal of plaintiff's

complaint is evidently a confirmation of the failure of evidence to prove his cause of action outlined therein, hence the dismissal is considered, as a matter of evidence, adjudication on the merits.

This does not, however, mean that there is likewise such absence of evidence to prove defendant's counterclaim although the same arises out of the subject matter of the complaint which was merely terminated for lack of proof. To hold otherwise would not only work injustice to defendant but would be reading a further provision into Section 3 and wresting a meaning therefrom although neither exists even by mere implication.

Thus understood, the complaint can accordingly be dismissed, but relief can nevertheless be granted as a matter of course to defendant on his counterclaim as alleged and proved, with or without any reservation therefor on his part, unless from his conduct, express or implied, he has virtually consented to the concomitant dismissal of his counterclaim.The present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring that any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint.

Certainly, if the counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the complaint.

Petition granted.

Filinvest v CA GR 142439 June 30, 2006 (Failure to prosecute)This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Court, as amended, seeking to set aside a Decision annulling the sale of a parcel of land to the late Ricardo Alvarez and the subsequent transfers to Mercedes Oliver and petitioner Filinvest Land Inc. (Filinvest); and the reversion of the subject property to the ownership of the government. The Court of Appeals in its assailed Decision affirmed the Decision of the Department of Agrarian Reform Adjudication Board (DARAB).

FACTS:

The subject matter in this case is a parcel of land. The Department of Agrarian Reform (DAR) awarded to

Ricardo Alvarez the right to purchase the land in question, pursuant to an Order of Award. Ricardo

Alvarez, with the consent of his wife, respondent Rosario Param, purchased the land, evidenced by a

Deed of Sale executed by the DAR. This Deed of Sale specifically prohibited the transfer of the land

within ten (10) years from the issuance of the certificate of title to any person other than the vendees

relatives within the third civil degree by consanguinity or affinity who are, at the same time, qualified

beneficiaries in accordance with Section 62 of Republic Act No. 3844, or the Agricultural Land Reform

Code. However, pending the issuance of the certificate of title of the said land, Presidential Decree No.

1474, Declaring the San Pedro Tunasan Estate (also known as the Laguna Resettlement Project) of the

Department of Agrarian Reform Suitable for Residential, Commercial, or Industrial, or other Non-

Agricultural Purposes, was enacted. This effectively repealed the ten-year prohibition on the transfer of

agrarian lands. The Register of Deeds issued Transfer Certificate of Title, covering the subject land, in the

name of Ricardo Alvarez. Only 16 days after the title was issued, Ricardo Alvarez and his wife,

Rosario Param, sold the said land to Mercedes Oliver for P10,000. Oliver was not a relative within the

third degree of consanguinity and had no capacity to personally cultivate the land, as required of a

qualified beneficiary. Thus, TCT No. 62731 was cancelled, and TCT No. 64967 was issued in the name of

Mercedes Oliver. Mercedes Oliver sold the subject land to Filinvest, resulting in the issuance of TCT. The

heirs of the late Ricardo Alvarez filed a case for reconveyance, redemption and damages against

Mercedes Oliver, Avelino Ramos and Jose Nunez. Respondents filed an Amended Complaint for

Annulment of Title with Reconveyance, wherein they claim that the sale of the subject land was made

without their knowledge, and it was only in the 1980s that they learned of such sale. They alleged that

their mother and father, both illiterate, were deceived by the defendants into executing the Deed of Sale

covering the subject land in favor of Mercedes Oliver. Respondents also argued that such sale was void

since the Deed of Sale was executed in violation of the law which enjoins the sale of the subject land.

This case was dismissed for failure of the respondents and counsel to appear during the hearing for the

reception of their evidence, despite due notice and after eight postponements. The order became final

and executory when the respondents failed to file a motion for reconsideration of this Order, despite

receipt thereof. Respondents filed a complaint against Mercedes Oliver and Filinvest before the Provincial

Agrarian Reform Adjudication. seeking to annul the Deed of Sale between the Spouses Alvarez and

Mercedes Oliver and the subsequent transfer between Mercedes Oliver and Filinvest, on grounds similar

to the complaint filed before the RTC of Bian. They also sought the issuance of a restraining order

enjoining Filinvest from bulldozing the subject land, which was occupied and cultivated by the

respondents. Mercedes Oliver filed a Motion to Dismiss on the grounds of res judicata and that the

PARAD had no jurisdiction over the subject matter of the case. Filinvest similarly filed a motion to dismiss

on the grounds of res judicata and laches. It also alleged, in its defense, that it was a purchaser for value

and in good faith. In its Position Paper, Filinvest likewise asserted that the restriction against selling the

subject land within ten years, provided under the Deed of Sale executed by DAR in favor of the Spouses

Alvarez had already been superseded by Presidential Decree No. 1474. PARAD dismissed the complaint

on the ground of res judicata. Moreover, it ruled that the sale between the Spouses Alvarez and

Mercedes Oliver was valid. The DARAB ruled, too, that res judicata as a bar against filing a complaint

with the PARAD is not applicable in this case since there was no adjudication of the merits before the

RTC of Bian.

 

The DARAB considered as self-serving and unsupported by evidence the allegations of the

respondents that the consent of the Spouses Alvarez was obtained through fraud in connection with the

sale made in favor of Mercedes Oliver. It also ruled that the sale between Ricardo Alvarez and Mercedes

Oliver was a violation of the ten-year prohibition against the transfer of the land imposed by the Deed of

Sale between the government and Ricardo Alvarez, in accordance with Section 62 of Republic Act No.

3844. Such act rendered the Deed of Sale executed by the DAR in favor of Ricardo Alvarez void, and,

therefore, the subsequent transfers to Mercedes Oliver and Filinvest were, likewise, void. The petitioners then filed a Petition for Certiorari under Section 43 of the 1997 Rules of Court before the Court of Appeals the appeal was again dismissed for lack of merit and the assailed Decision of the DARAB was affirmed. The petitioners filed a Motion for Reconsideration which was subsequently denied in a Resolution. Hence this petition.

ISSUE:

WHETHER OR NOT THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED REVERSIBLE ERROR IN RULING THAT THE DOCTRINE OF RES JUDICATA DOES NOT APPLY TO BAR RESPONDENTS COMPLAINT IN DARAB CASE NO. IV-032-L

HELD:The respondents filed the case before the PARAD, not because the case involved a dispute that would be properly resolved by the PARAD, but because they were already barred from filing the case before the proper forum. The allegations and relief found in the Complaint filed by the respondents before the PARAD are conspicuously similar to those in the Amended Complaint which they had earlier filed before the trial court of Bian.

As earlier discussed, the trial court ordered the dismissal of the case for failure to prosecute. When the respondents failed to file a motion for reconsideration, despite due notice, such order became final.

This Court cannot countenance the party-litigants recourse to such measures. The foundation principle upon which the doctrine of res judicata rests is that parties should not be permitted to litigate the same issue more than once. When a right or fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it is not reversed, should be conclusive upon the parties and those in privity with them in law or estate.

The following requisites must concur in order that a prior judgment may bar a subsequent action: (1) the former judgment or order must be final; (2) it must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case; (3) it must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and second actions, identity of parties, of subject matter and of cause of action.

A perusal of the records easily shows that the first, third and fourth requirements have been complied with in this case. The Order rendered by the RTC of Bian, dismissing the case, is clearly final, as it disposed of all the rights and obligations of the parties before it. There was never any question raised on the jurisdiction of Branch XXIV of the RTC to hear and decide the question of whether the sale executed between Ricardo Alvarez and Mercedes Oliver was valid. It is also obvious that the allegations of the respondents in their Amended Complaint filed before the RTC of Bian are substantially identical to the Complaint filed before the PARAD; involved the same subject matter, and raised the same causes of action.

The only contention between the parties was whether the second requirement, that the decision or order must have been based on the merits of the case, was met. In situations contemplated in Section 3, Rule 17 of the Rules of Court, where a complaint is dismissed for failure of the plaintiff to comply with a lawful order of the court, such dismissal has the effect of an adjudication upon the merits. A dismissal for failure to prosecute has the effect of an adjudication on the merits, and operates as res judicata, particularly when the court did not direct that the dismissal was without prejudice.

Dismissal w/o prejudiceHeirs of Gaudiane v CA GR 119879 March 11, 2004]

FACTS: The lot in controversy is Lot 4389 located at Dumaguete City and covered by Original Certificate

of Title No. 2986-A (OCT 2986-A) in the names of co-owners Felix and Juana Gaudiane. Felix died in

1943 while his sister Juana died in 1939. Herein respondents are the descendants of Felix while

petitioners are the descendants of Juana. 

On November 4, 1927, Felix executed a document entitled Escritura de Compra-Venta (Escritura, for

brevity) whereby he sold to his sister Juana his one-half share in Lot No. 4156 covered by Transfer

Certificate of Title No. 3317-A. 

Petitioners’ predecessors-in-interest, Geronimo and Ines Iso (the Isos), believed that the sale by Felix to

their mother Juana in 1927 included not only Lot 4156 but also Lot 4389. In 1974, they filed a pleading in

the trial court seeking to direct the Register of Deeds of Dumaguete City to cancel OCT 2986-A covering

Lot 4389 and to issue a new title in favor of the Isos. This was later withdrawn after respondents’

predecessors-in-interest, Procopio Gaudiane and Segundo Gaudiane, opposed it on the ground that the

Isos falsified their copy of the Escritura by erasing “Lot 4156” and intercalating in its place “Lot 4389.” 

ISSUE: Whether the court gravely erred in not giving due course to the claim of petitioners and legal

effect of prescription and laches adverted by defendants-appellants in their answer and affirmative

defenses proven during the hearing by documentary and testimonial evidence. 

RULING: As a general rule, ownership over titled property cannot be lost through prescription.[12]

Petitioners, however, invoke our ruling in Tambot vs. Court of Appeals[13] which held that titled property

may be acquired through prescription by a person who possessed the same for 36 years without any

objection from the registered owner who was obviously guilty of laches. 

Petitioners’ claim is already rendered moot by our ruling barring petitioners from raising the defense of

exclusive ownership due to res judicata. Even assuming arguendo that petitioners are not so barred, their

contention is erroneous. As correctly observed by the appellate court. 

As explained earlier, only Lot No. 4156 was sold. It was through this misrepresentation that appellees’

predecessor-in-interest succeeded in withholding possession of appellees’ share in Lot No. 4389.

Appellees cannot, by their own fraudulent act, benefit therefrom by alleging prescription and laches.

Cruz v CA GR 164797 Feb 13 2006 (Dismissal without prejudice)FACTS:There are four (4) cases involved in this controversy. The first case that was filed between the parties is for Unlawful Detainer which was decided in favor of petitioner Cruz and Concepcion. The second case is for Quieting of title which was dismissed for failure to prosecute. The third case is for injuction which was dismissed on the ground of res judicata and it was ruled that there is a substantial identity of parties and the petition for quieting of title. The fourth case is the instant controversy for Annulment of Title With Damages. The petitioners interposed a Motion for Outright Dismissal which was granted by the Court a quo. However, when herein private respondents interposed their Motion for Reconsideration, the court a quo reversed itself and reinstated the present case. Petitioners went to the Court of Appeals. The latter dismissed the petition for lack of merit. It ruled that one of the elements of res judicata, i.e., that there must be, between the first and the second actions, identity of parties, of subject matter and of cause of action, is lacking. Petitioners filed a motion for reconsideration which was denied. ISSUE:WON res judicata apply in the case at barHELD:YES. Under the rule of res judicata, also known as bar by prior judgment, a final judgment or order on the merits, rendered by a Court having jurisdiction of the subject matter and of the parties, is conclusive in a subsequent case between the same parties and their successor-in-interest by title subsequent to the

commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity. The requisites essential for the application of the principle are: (1) there must be a final judgment or order; (2) said judgment or order must be on the merits; (3) the Court rendering the same must have jurisdiction on the subject matter and the parties; and (4) there must be between the two cases identity of parties, identity of subject matter, and identity of causes of action. There being no dispute as to the presence of the first and third elements, we now determine if the second and fourth elements are attendant in the case.

On the second element, private respondents argue that the dismissal of Civil Case No. 1600 (for Quieting of Title) was not a dismissal on the merits. The dismissal of this case, they claim, will not bar the filing of the instant case (Civil Case No. 2583-02 for Annulment of Title) because there was neither litigious consideration of the evidence nor any stipulations submitted by the parties at the trial. In fact, there was no pre-trial conference and that after four years of court inactivity, the case was dismissed for failure to prosecute.

The rule enumerates the instances where the complaint may be dismissed due to plaintiff’s fault: (1) if he fails to appear on the date for the presentation of his evidence in chief; (2) if he fails to prosecute his action for an unreasonable length of time; or (3) if he fails to comply with the rules or any order of the court. Once a case is dismissed for failure to prosecute, this has the effect of an adjudication on the merits and is understood to be with prejudice to the filing of another action unless otherwise provided in the order of dismissal. In other words, unless there be a qualification in the order of dismissal that it is without prejudice, the dismissal should be regarded as an adjudication on the merits and is with prejudice.

It is clear from the afore-mentioned order that said case was dismissed, upon petitioners’ motion, for failure of private respondents and their counsel to attend several scheduled hearings for the presentation of their evidence. Since the order did not contain a qualification whether same is with or without prejudice, following Section 3, it is deemed to be with prejudice and shall have the effect of an adjudication on the merits. A ruling based on a motion to dismiss, without any trial on the merits or formal presentation of evidence, can still be a judgment on the merits.

Dael v Sps Beltran GR 156470 April 30, 2008 (Notice of dismissal prevails over motion to dismiss)

FACTS: respondents sold a land to petitioner

Petitioner alleged that respondents did not disclose that the land was previously mortgaged and that an extrajudicial foreclosure over the property had already been instituted so he was constrained to bid in the extrajudicial sale

petitioner Frederick Dael filed before the RTC a Complaint for breach of contract and damages against respondent-spouses Beltran

respondents filed a Motion to Dismiss on the ground that petitioner had no cause of action since the contract to sell stated that the vendor was Benedicto Beltran and the vendee was Frederick George Ghent Dael, not the petitioner.

in a hearing on the motion, petitioner's counsel, disclosed that petitioner is the father of Frederick George Ghent Dael whose name appears as the contracting party in the Contract to Sell. They moved to reset the hearing to enable the petitioner to withdraw and have the complaint dismissed, amended, or to enter into a compromise agreement with respondents

RTC on the same day ordered petitioner to clarify whether or not he and Frederick George Ghent Dael were one and the same person; whether or not they were Filipinos and residents of Dumaguete City; and whether or not Frederick George Ghent Dael was of legal age, and married, as stated in the Contract to Sell

Petitioner did not comply. Instead, he filed a Notice of Dismissal on February 20, 2002

RTC dismissed the complaint with prejudice

Petitioner argued that the RTC erred in dismissing the complaint with prejudice based on respondents' Motion to Dismiss, and not without prejudice based on his Notice of Dismissal

He asserts it is the prerogative of the plaintiff to indicate if the Notice of Dismissal filed is with or without prejudice and the RTC cannot exercise its own discretion and dismiss the case with prejudice

respondents on the other hand counter that the RTC is correct in dismissing the case with prejudice based on their Motion to Dismiss because they filed their motion ahead of petitioner who filed his Notice of Dismissal only on February 20, 2002

They further argue that although it is correct that under the 1997 Rules of Civil Procedure a complaint may be dismissed by the plaintiff by filing a notice of dismissal before service of the answer or of a motion for summary judgment, the petitioner filed the Notice of Dismissal only as an afterthought after he realized that the Motion to Dismiss was meritorious

ISSUE: Whether or not the RTC was correct in dismissing the complaint with prejudice

HELD: NO

Under Section 1, Rule 17 of the 1997 Rules of Civil Procedure it is mandatory that the trial court issue an order confirming such dismissal and, unless otherwise stated in the notice, the dismissal is without prejudice and could be accomplished by the plaintiff through mere notice of dismissal, and not through motion subject to approval by the court. Dismissal is ipso facto upon notice, and without prejudice unless otherwise stated in the notice

The trial court has no choice but to consider the complaint as dismissed, since the plaintiff may opt for such dismissal as a matter of right, regardless of the ground

Section 1 of Rule 17 does not encompass a Motion to Dismiss. The provision specifically provides that a plaintiff may file a notice of dismissal before service of the service of the answer or a motion for summary judgment. Thus, upon the filing of the Notice of Dismissal by the plaintiff, the Motion to Dismiss filed by respondents became moot and academic and the trial court should have dismissed the case without prejudice based on the Notice of Dismissal filed by the petitioner

Moreover, to allow the case to be dismissed with prejudice would erroneously result inres judicata [18] and imply that petitioner can no longer file a case against respondents without giving him a chance to present evidence to prove otherwise

Mendoza v Paule GR 175885 Feb 31 2009 (Counterclaim)Facts:

Engineer Eduardo M. Paule (PAULE) is the proprietor of E.M. Paule Construction and Trading (EMPCT). PAULE executed a special power of attorney (SPA) authorizing Zenaida G. Mendoza (MENDOZA) to participate in the pre-qualification and bidding of a National Irrigation Administration (NIA) project and to represent him in all transactions related thereto. EMPCT, through MENDOZA, participated in the bidding of the NIA-Casecnan Multi-Purpose Irrigation and Power Project (NIA-CMIPP) and was awarded Packages A-10 and B-11 of the NIA-CMIPP Schedule A. MENDOZA received the Notice of Award which was signed by Engineer Alexander M. Coloma (COLOMA), then Acting Project Manager for the NIA-CMIPP. Packages A-10 and B-11 involved the construction of a road system, canal structures and drainage box culverts. When Manuel de la Cruz (CRUZ) learned that MENDOZA is in need of heavy equipment for use in the NIA project, he met up with MENDOZA in an apartment where the latter was

holding office under an EMPCT signboard. A series of meetings followed in said EMPCT office among CRUZ, MENDOZA and PAULE. MENDOZA and CRUZ signed two Job Orders/Agreements for the lease of the latters heavy equipment (dump trucks for hauling purposes) to EMPCT. PAULE revoked the SPA he previously issued in favor of MENDOZA; consequently, NIA refused to make payment to MENDOZA on her billings. CRUZ, therefore, could not be paid for the rent of the equipment. Upon advice of MENDOZA, CRUZ addressed his demands for payment of lease rentals directly to NIA but the latter refused to acknowledge the same and informed CRUZ that it would be remitting payment only to EMPCT as the winning contractor for the project. In a letter, CRUZ demanded from MENDOZA and/or EMPCT payment of the outstanding rentals. CRUZ filed for collection of sum of money with damages and a prayer for the issuance of a writ of preliminary injunction against PAULE, COLOMA and the NIA. PAULE in turn filed a third-party complaint against MENDOZA, who filed her answer thereto, with a cross-claim against PAULE. MENDOZA alleged in her cross-claim that because of PAULEs whimsical revocation of the SPA, she was barred from collecting payments from NIA, thus resulting in her inability to fund her checks which she had issued to suppliers of materials, equipment and labor for the project. She claimed that estafa and B.P. Blg. 22 cases were filed against her; that she could no longer finance her childrens education; that she was evicted from her home; that her vehicle was foreclosed upon; and that her reputation was destroyed, thus entitling her to actual and moral damages in the respective amounts of P3 million and P1 million. PAULE again constituted MENDOZA as his attorney-in-fact. At the pre-trial conference, the other parties were declared as in default and CRUZ was allowed to present his evidence ex parte. Among the witnesses he presented was MENDOZA, who was impleaded as defendant in PAULEs third-party complaint.

On March 6, 2003, MENDOZA filed a motion to declare third-party plaintiff PAULE non-suited with prayer that she be allowed to present her evidence ex parte.

However, without resolving MENDOZAs motion to declare PAULE non-suited, and without granting her the opportunity to present her evidence ex parte, the trial court rendered its decision in favor of the plaintiff. PAULE and MENDOZA both appealed the trial courts decision to the Court of Appeals. PAULE claimed that he did not receive a copy of the order of default; that it was improper for MENDOZA, as third-party defendant, to have taken the stand as plaintiff CRUZs witness; and that the trial court erred in finding that an agency was created between him and MENDOZA, and that he was liable as principal thereunder.

On the other hand, MENDOZA argued that the trial court erred in deciding the case without affording her the opportunity to present evidence on her cross-claim against PAULE; that, as a result, her cross-claim against PAULE was not resolved, leaving her unable to collect the amounts

The Court of Appeals rendered the assailed Decision which dismissed CRUZs complaint, as well as MENDOZAs appeal. The appellate court held that the SPAs issued in MENDOZAs favor did not grant the latter the authority to enter into contract with CRUZ for hauling services; the SPAs limit MENDOZAs authority to only represent EMPCT in its business transactions with NIA, to participate in the bidding of the project, to receive and collect payment in behalf of EMPCT, and to perform such acts as may be necessary and/or required to make the said authority effective. Thus, the engagement of CRUZs hauling services was done beyond the scope of MENDOZAs authority.

 

As for CRUZ, the Court of Appeals held that he knew the limits of MENDOZAs authority under the SPAs yet he still transacted with her.

CRUZ and MENDOZAs motions for reconsideration were denied; hence, these consolidated petitions

Issue:

Held:

Petitions granted

PAULE should be made civilly liable for abandoning the partnership, leaving MENDOZA to fend for her own, and for unduly revoking her authority to collect payments from NIA, payments which were necessary for the settlement of obligations contracted for and already owing to laborers and suppliers of materials and equipment like CRUZ, not to mention the agreed profits to be derived from the venture that are owing to MENDOZA by reason of their partnership agreement. Thus, the trial court erred in disregarding and dismissing MENDOZAs cross-claim which is properly a counterclaim, since it is a claim made by her as defendant in a third-party complaint against PAULE, just as the appellate court erred in sustaining it on the justification that PAULEs revocation of the SPAs was within the bounds of his discretion under Article 1920 of the Civil Code.

Where the defendant has interposed a counterclaim (whether compulsory or permissive) or is seeking affirmative relief by a cross-complaint, the plaintiff cannot dismiss the action so as to affect the right of the defendant in his counterclaim or prayer for affirmative relief. The reason for that exception is clear. When the answer sets up an independent action against the plaintiff, it then becomes an action by the defendant against the plaintiff, and, of course, the plaintiff has no right to ask for a dismissal of the defendant’s action. The present rule embodied in Sections 2 and 3 of Rule 17 of the 1997 Rules of Civil Procedure ordains a more equitable disposition of the counterclaims by ensuring that any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the complaint.

Notwithstanding the immutable character of PAULEs liability to MENDOZA, however, the exact amount thereof is yet to be determined by the trial court, after receiving evidence for and in behalf of MENDOZA on her counterclaim, which must be considered pending and unresolved.

Benedicto v Lacson GR 142508 May 5, 2010 (Effect)

Facts:

Under Presidential Decree No. 388, the Philippine Sugar Commission (PHILSUCOM) was created and vested with the power to act as the single buying and selling agency of sugar in the Philippines. PHILSUCOM organized the National Sugar Trading Corporation (NASUTRA) as its buying marketing arm. Petitioner Robert S. Benedicto was the concurrent Chairman and President of Traders Royal Bank and NASUTRA. The case stems from a Complaint, filed by respondents, individual sugar planters and agricultural corporations Manuel Lacson et al.

Respondents complaint was premised on a claim for unpaid shares. The claims cover the sugar export sales undervalued by NASUTRA and coursed through Traders Royal Bank, the total amount of which is claimed by respondents. Petitioner, as President and concurrent Chairman of both Traders Royal Bank and NASUTRA, was charged by respondents with fraud and bad faith, not only in refusing to furnish them accurate data on NASUTRAs export sugar sales, but, more importantly, in under-reporting and under-declaring the true prices of the shipments. Respondents, thus, prayed for a refund of their shares in the undervalued shipments. Petitioner filed a Motion to Dismiss, arguing therein (1) that respondents had violated the rule on forum shopping; (2) that respondents have no cause of action; (3) that the issues involved are res judicata or rendered moot by case law; and (4) that the claim or demand has already been paid.

Issue:

WON CA erred when it chose not to dismiss the case based on the other grounds of lack of cause of action, res judicata, payment and prescription warrant the dismissal of the complaint

Held:

PETITION DENIED

It is a settled rule that an Order denying a motion to dismiss is merely interlocutory and, therefore, not appealable, nor can it be subject of a petition for review on certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. The ordinary procedure to be followed in that event is to file an answer, go to trial, and if the decision is adverse, reiterate the issue on appeal from the final judgment.

While the rule refers to instances when a motion to dismiss is completely denied, this Court finds no reason not to apply the same in instances when some of the grounds raised in a motion to dismiss are denied by the lower court. The other grounds now raised by petitioner were not before the CA because the same were not put in issue by respondents when they chose to assail the RTCs Order to dismiss the complaint. This is understandable especially since the other grounds were not made the basis of the RTCs Order. Procedurally then, the proper remedy of petitioner, should he choose to reassert the other grounds, is to interpose the same as defenses in his answer and not to put them in issue in this appeal.

Rule 18 Pre-trial

-Definition

Anson Trade Center v Pacific Banking, GR 179999 Mar 17 2009

Facts:Petitioners are corporations engaged in retail and/or wholesale general merchandising and they obtained a loan from the respondent. Subsequently, the petitioners defaulted in the payment of their loan. Respondent made several demands for payment upon petitioners, to no avail. This prompted the respondent to file a collection case against the respondent. The petitioner moved for the dismissal of the case due to the non-appearance of the respondent in the pre-trial. The respondents filed a Petition for Certiorari under Rule 65, praying that the RTC committed grave abuse of discretion amounting to lack or in excess of jurisdiction when it dismissed the case due to the respondent’s non appearance. The latter asserted that its absence is not intentional because they are undergoing liquidation process and the

Monetary Board is ordering the closure of respondent due to insolvency. Respondent pleaded for the relaxation of the rules to avert irreparable damage to it.

Issue:

WON the trial court committed grave abuse of discretion in dismissing respondent’s claim against the petitioner due to non-appearance in the pre trial

Held:Yes, the trial court committed grave abuse of its discretion. The Court find that the petition of the petitioner is unmeritorious. Pertinent provisions of Rule 18 of the Revised Rules of Court on Pre-Trial read:

SEC. 4. Appearance of parties. – It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents.

Pursuant to the afore-quoted provisions, non-appearance by the plaintiff in the pre-trial shall be cause for dismissal of the action. However, every rule is not without an exception. In fact, Section 4, Rule 18 of the Revised Rules of Court explicitly provides that the non-appearance of a party may be excused if a valid cause is shown therefor. We find such a valid cause extant in the case at bar. There is no question that herein respondent received notice of the pre-trial conference scheduled on 10 October 2005, but it failed to attend the same. Such non-appearance notwithstanding, the Court Of Appeals annulled the 10 October 2005 Order of the RTC dismissing the case after finding that respondent did not intentionally snub the pre-trial conference. There is no reason to disturb such finding. The Monetary Board ordered the closure of respondent by reason of insolvency, and it has since been represented by its liquidator PDIC in all its undertakings. Still in the course of the liquidation of respondent, its liquidator PDIC was reorganized in the late 2004 to early 2005. The four departments in the PDIC handling litigation were reduced to one, with the new Litigation Department having only four in-house counsels who assumed thousands of cases arising from the closure by the Monetary Board of more than 400 banks. It is understandable how the notice for the pre-trial conference in the case could be lost or overlooked, as the PDIC was still coping and adjusting with the changes resulting from its reorganization.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is hereby DENIED

Definition of Pre-trial:

Pre-trial is a procedural device intended to clarify and limit the basic issues raised by the parties and to take the trial of cases out of the realm of surprise and maneuvering. It is an answer to the clarion call for the speedy disposition of cases. Hailed as the most important procedural innovation in Anglo-Saxon justice in the nineteenth century, it thus paves the way for a less cluttered trial and resolution of the case.

Interlining Corp. v Philippine trust co. 428 scra 583 (2002)

Facts:

Respondent Philippine Trust Company (Philtrust) granted a P.5 million packing credit line and P1.5 million domestic letter of credit and trust receipt to petitioner Interlining Corporation for the importation of raw

materials for its business. A month later, petitioners Pablo Gonzales, Sr., Elena Tan Chin Sui, Pablo Gonzales, Jr., Thomas Gonzales and Arsenio Gonzales executed an Undertaking of Suretyship agreement binding themselves to guarantee, jointly and severally with petitioner corporation, all such amount as may be due to respondent Philtrust by virtue of the availment of its credit facilities. On numerous occasions, petitioner corporation availed of respondents credit facilities. Partial payments were made by petitioner corporation but it failed to pay in full its obligations, despite repeated demands. Respondent filed a complaint for collection of a sum of money, against petitioner corporation and the individual petitioners before the RTC. Pre-trial hearings were duly conducted by the trial court. The trial court issued its Pre-Trial Conference Order. Respondents counsel Atty. Eulogio V. Reyes and petitioners counsel Atty. Servando S. Timbol, Jr. submitted to the trial court a Joint Stipulation of Facts and Motion for Summary Judgment stating therein two (2) issues for consideration by the trial court: a) whether or not defendants (petitioners herein) can be made jointly or severally liable to the plaintiff (respondent herein) in the amount claimed in the complaint; b) whether or not there is novation which had released the individual defendants from their obligations as sureties under the Deed of Undertaking of Suretyship.

The trial court issued its 1st Supplemental Pre-Trial Order. It stated in paragraph III that, as per stipulation of the parties, the same two (2) issues were submitted for resolution. he trial court issued its Decision finding for the respondent. However, it ordered petitioner corporation to answer solely for its obligation. The trial court absolved the individual petitioners from their joint and solidary liability for the debt of petitioner corporation although there was no novation of the loan contract between the parties. It held that the total liability for the obligation was assumed by the petitioner corporation as per the parties stipulation during the April 8, 1991 Pre-Trial Conference. Respondent moved for reconsideration insofar as the trial court absolved the individual petitioners from solidary liability. When its motion was denied, respondent sought recourse before the Court of Appeals. Court of Appeals found for the respondent. It held that the Deed of Undertaking of Suretyship was not abrogated and remained in full force and effect. It also found that as the respondent did not stipulate on the exclusion of the solidary liability issue, the individual petitioners should be held solidarily liable with petitioner corporation for the amount adjudged by the trial court.

When petitioners motion for reconsideration was denied, they filed the present appeal

Issue:

1) WON THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DISREGARDING THE STIPULATIONS AGREED UPON IN THE PRE-TRIAL ORDER OF THE REGIONAL TRIAL COURT OF MANILA DATED MARCH 6, 1989

2) WON THE COURT OF APPEALS COMMITED AN ERROR OF LAW IN DISREGARDING THE AFFIRMATION OF THE PRE-TRIAL ORDER DATED MARCH 6, 1989 MADE BY RESPONDENTS COUNSEL

3) THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DISREGARDING THE FAILURE OF RESPONDENTS COUNSEL TO CONTROVERT THE PRE-TRIAL ORDER DATED MARCH 6, 1989 UP TO THE TIME THAT THE CASE WAS FINALLY DECIDED BY THE REGIONAL TRIAL COURT OF MANILA

Held:

NO. The conduct of a pre-trial in civil actions has been mandatory as early as January 1, 1964, upon the effectivity of the Revised Rules of Court. Pre-trial is a procedural device intended to clarify and limit the basic issues between the parties. It thus paves the way for a less cluttered trial and resolution of the

case. Its main objective is to simplify, abbreviate and expedite the trial, or totally dispense with it, as in the case at bar.

Prescinding therefrom, it is a basic legal precept that the parties are bound to honor the stipulations they made during the pre-trial. The issue in the case at bar involves a determination of whether or not the counsel of respondent agreed to stipulate as to the release of the individual petitioners from their solidary liability.

A careful and thorough review of the records, particularly the pre-trial hearings conducted on March 6, 1989 and April 8, 1991 and the subsequent pleadings in the case, reveals that respondents counsel did not agree to relieve the individual petitioners of their obligation.  A close scrutiny of the transcript of the March 6, 1989 pre-trial conference shows that the parties counsels merely stated their proposedstipulations. Specifically, the trial judge opened the proceedings on said day by inquiring from the counsels of the parties their respective positions on the facts and issues of the case. Both counsels presented their proposed facts and issues but at no time did they commit themselves to stipulate on any of the matters brought out during said conference. Nor did the trial judge ask any of the counsels whether they agreed to stipulate on any of the matters presented therein. In fact, what appears on the March 6, 1989 transcript was a mere enumeration of the proposed stipulations by both counsels, most of which were only copied by the stenographer from the counsels pre-trial briefs. There was no agreement whatsoever on the proposed facts. This conclusion is further bolstered by the fact that at the continuation of the pre-trial conference, the respondents counsel declared that he would not agree to stipulate on the release of the individual petitioners on their solidary liability. Hence, in its 1st Supplemental Pre-Trial Order, dated April 8, 1991, the trial court itself included the solidary liability of the individual petitioners as one of the issues to be resolved in the case. Most importantly, the same issue was repeatedly raised by both parties in subsequent proceedings and pleadings filed in the trial court. In the Joint Stipulation of Facts, dated December 14, 1990, signed by both counsels for respondent and petitioners and submitted to the trial court, the solidary liability of the individual petitioners was clearly put in issue. Clearly, the entire pre-trial proceedings undisputably show that the issue as to the solidary liability of the individual petitioners should have been properly considered in the resolution of the collection case.

Neither could respondent be faulted for failing to question paragraph 5 of the first pre-trial Order, dated March 6, 1989, stating therein the release of the individual petitioners from liability, as the proceedings and pleadings subsequent thereto, filed by both parties, clearly included the issue of solidary liability for resolution of the trial court. Thus, it came as a surprise for the respondent that the decision rendered by the trial court excluded the individual petitioners from liability, citing as ground therefor the alleged stipulation made by by the respondent in March 1989.

-Setting for pre-trial

Espiritu v Lazaro, GR 181020 Nov 20 2009

Facts:

Issue:

Held:

Polanco v Cruz, GR 182426, Feb 13 2009

Facts:

Issue:

Held:

-Failure to have pre-trial

Madrid v Spouses Mapoy, GR 150887 Aug 14 2009

Facts:

Issue:

Held:

-Effect of Pre-trial order

Exception:

Heirs of Reyes v CA, 519 scra 250 (2007)

Facts:

Issue:

Held: