G.R. No. 103072. August 20, 1993
MOBIL OIL PHILIPPINES, INC. AND MOBIL PHILIPPINES, INC., PETITIONERS, VS. THE HON. COURT OF APPEALS, PETROLEUM DISTRIBUTORS AND SERVICES CORPORATION AND CONRADO LIMCACO, RESPOND…
FELICIANO, J.:
Private respondent Conrado Limcaco and Petroleum Distributors and
Services Corporation (“Distributors”) operated a gasoline and service
station under a dealership agreement with petitioner Mobil Oil Philippines,
Inc. (“Mobil Oil”). Under their
dealership agreement, private respondents were granted, and regularly availed
of, credit accommodations for the purchase of petitioner Mobil Oil’s petroleum
products.
In the course of its transactions with Mobil Oil, Distributors
noted various discrepancies of a substantial nature in the statements of
account which Mobil Oil prepared. Distributors accordingly asked periodically for a reconciliation of its account from
Mobil Oil. The business relationship
between Mobil Oil and Limcaco and Distributors went back in time about
seventeen (17) years.
Sometime in 1983, Mobil Oil and Caltex Philippines, Inc.
(“Caltex Phils.”) concluded negotiations for the purchase by the
latter of the former’s petroleum interests in the Philippines. On 5 August 1983, Mobil Oil informed Distributors that effective 1 September 1983,
Caltex Phils. would take over Mobil Oil’s Philippine business. Meanwhile, Mobil Philippines, Inc.
(“Mobil Phil.”) was organized and was designated as assignee of all trade account
receivables of Mobil Oil.
As a result of
Caltex Phils.’ take-over, Distributors pressed Mobil Oil for an early
reconciliation of its remaining outstanding accounts; Distributors wanted to
start its relationship with Caltex Phils. with a clean slate. Despite a series of meetings and
conferences, the parties were unable to reach a mutual acceptable
settlement. They executed instead an
agreement on 20 September 1983 containing the following stipulations, among
others:
“The parties, Mr. CONRADO LIMCACO, for himself and/or Petroleum
Distributors and Services Corporation and Mobil Oil Philippines, Inc. and Mobil
Philippines, Inc., represented by DIETER FOCK, hereby agree as follows:
1. CONRADO LIMCACO accepts the amount of
P310,738.30
as the tentative balance of his account with Mobil Oil Philippines, Inc.
2. MOBIL OIL PHILIPPINES, INC. undertakes,
applying its best efforts, to present within a period of thirty (30) days, an
updated statement of account showing Mr. Limcaco’s balance as of closing of
August 31, 1983 supported with appropriate documents. It is understood, however, that if such
updated statement supported by appropriate documents is not presented to Mr.
Limcaco or his duly authorized representative within said period of sixty (60)
days (sic), the payment ofP310,738.30 shall be considered final and
full payment of all accounts of Petroleum Distributors & Services
Corporation and/or Mr. Limcaco.
3. CONRADO LIMCACO hereby remits and Mobil
Oil Philippines, Inc., hereby accepts the amount ofP310,738.30 as
payment on account in consideration of which Mobil returns to Mr. Limcaco
the (following) checks of Petroleum Distributors & Services Corporation:
x x x x
x x x x
x.”[1]
(Underscoring
supplied)
Mr. Limcaco paid the sum of P310,738.30 to Mobil Oil on
the same date the agreement was executed.
On 7 December 1983, however, Mobil Oil and Mobil Phils. presented
to Mr. Limcaco and Distributors what was said to be an updated reconciliation
of accounts showing P363,859.63, due from private respondents, but
without the corresponding supporting documents. In reply, private respondents stated that petitioners’ failure to
produce the appropriate supporting documents within the stipulated period
operated as a contractual waiver of the latter’s claim against the former. The payment of P310,738.30 on 20
September 1983 discharged in full all accounts due to petitioners. Thus, private respondents said, Mobil Oil
and Mobil Phil. could no longer pursue any claim against Distributors or its
president, Mr. Limcaco. Relations
between the parties deteriorated rapidly.
Petitioners Mobil Oil and Mobil Phils. instituted a collection
suit with prayer for preliminary attachment against private respondent
Distributors and Conrado Limcaco, docketed as Civil Case No. 6023, on 29
December 1983, in the Regional Trial Court (“RTC”) of Makati. Summons was, however, not served upon
private respondents until after more than seven months or only on 27 June
1984.
In the meantime, another civil action between the same parties
was pending before the RTC of Pasay. This civil suit was a petition for declaratory relief instituted by
private respondent Distributors and Limcaco against petitioners on 15 December
1983. As early as 3 January 1984,
petitioners moved to dismiss the petition for declaratory relief. The RTC of Pasay held in abeyance, however,
the resolution of petitioners’ motion to dismiss, holding that the grounds
relied upon did not appear indubitable. Petitioners failed to file their answer to the petition for declaratory
relief within the reglementary period. Thus, on 6 June 1984, private respondents moved to declare petitioners
in default and the trial court granted the motion. On 10 July 1984, private respondents presented their oral and
documentary evidence; thereafter, the case was submitted for decision. On 17 July 1984, the RTC of Pasay decided
the Declaratory Relief petition and declared that:
“WHEREFORE, judgment is hereby rendered, declaring that, under
the Agreement (Exhibit “E”), respondents [petitioners herein] have
waived any and all further claims against petitioners [respondents herein] on
the accounts in question in view of respondents’ failure to comply with their
undertaking to submit an updated statement of account accompanied by supporting
documents within
the stipulated period of sixty (60) days and that the petitioner’s payment ofP310,738.30
to respondents, under the circumstances, amounted to a full and final payment
and settlement of all its and/or Conrado Limcaco’s obligations with
respondents.” (Brackets supplied)
Meanwhile, in the Collection suit before the Makati RTC,
petitioners pursued their prayer for a writ of preliminary attachment. On 11 July 1984, the RTC of Makati issued
the writ and various properties of respondent Distributors were garnished or
attached (e.g. bank accounts, heavy equipment and other personal property).
On 17 July 1984, however, the RTC of Makati dissolved the writ of
attachment upon motion of private respondents. In dissolving that writ, the trial court stated cryptically that
“it could have been insufficiently swayed (sic) in issuing the writ in question on July 11, 1984,” and
in effect held that the issuance of the attachment had been improvident:
“Without
casting outright malice on the part of the plaintiff and counsel, a writ of preliminary
attachment being a harsh writ which creates substantial perturbation on one’s
property, must be viewed with outmost caution, more importantly so when
vigorously controverted.”[2]
Distributors and Limcaco filed in due course their “Answer
with Counterclaim.” The Answer raised affirmative defenses (principally, litis pendentia and extinguishment or waiver of petitioners’
claims) to support relief from the claim of petitioners; their counterclaim was
for damages arising by reason
of allegedly wrongful issuance and enforcement of the writ of preliminary
attachment and for attorney’s fees.
Thereafter, on 4 September 1984, private respondents moved for a
preliminary hearing on their affirmative defenses. After hearing in due course, the RTC of Makati, through Judge
Gerochi, dismissed the complaint in an Order dated 20 February 1985, the
dispositive portion of which read:
“WHEREFORE, in view of the foregoing, by reason of litis
pendentia, the above entitled case is hereby DISMISSED, with costs against plaintiffs.”
Shortly after the Order of dismissal was rendered, or on 7 March
1985, private respondent Distributors and Limcaco moved for a hearing on their
counterclaim for damages arising from wrongful issuance of preliminary
attachment.
Judge Gerochi, however, held in abeyance the hearing on respondents’ counterclaim in an Order
dated 17 March 1985 and declared that:
“It appearing that the above-entitled case has been appealed
to the Honorable Intermediate Appellate Court (now the Court of Appeals), pending
resolution thereof, let the hearing on the counterclaim of the
defendants be held in abeyance.”[3]
(Underscoring supplied)
In the meantime, petitioners’ appeal from the order of the RTC of
Pasay in the Declaratory Relief case, as well as their appeal from the order of
dismissal by RTC of Makati in the Collection suit, were consolidated and
docketed as AC-G.R. CV Nos. 04324 and 06051. In due time, the orders appealed from were both affirmed in toto
by the then Intermediate Appellate Court in a Decision dated 30 September 1985.
Petitioners thereafter came before this Court on Petitions for
Review Certiorari docketed as G.R. Nos. 73099 and 73220. This Court, in a Resolution dated 18 March 1987,
denied both Petitions for lack of merit, holding that the findings of the
Intermediate Appellate Court were entirely in accord with the facts on record
and applicable law and jurisprudence. This Resolution of the Supreme Court became final and executory on 13
August 1987.[4]
After the records of the case were returned to the RTC of Makati,
private respondents moved on 21 September 1987 to set their counterclaims for
pre-trial conference.
Acting on that motion without opposition from petitioners, Judge
Nicolas A. Gerochi, Jr. of the RTC of Makati set the pre-trial conference on
the counterclaims for 22 December 1987. Several postponements, however, delayed the pre-trial hearing on the
respondents claims for damages for several months.
On 7 March 1988, petitioners Mobil Oil and Mobil Philippines
filed an “Opposition to Defendants’ Motion to Set Dated 21 September
1987.” Petitioners there contended that the trial court no longer had
authority to hear any application for damages at that point in time because the
judgment dismissing Civil Case No. 6023 had become final and executory. Petitioners prayed that private respondents’
motion to set their counterclaim for pre-trial dated 21 September 1987 be
denied or that the order setting the motion for hearing be set aside.
Acting on petitioners’ motion, the RTC of Makati, this time
through another presiding judge, Honorable Jose C. de la Rama, granted
petitioners’ motion in an Order dated 4 July 1988 which reads:
“WHEREFORE, premises considered, this Court declares that it
has lost jurisdiction to continue further proceedings on defendants’
(respondents herein) counterclaims. All
previous orders and pre-trial settings are here SET ASIDE.” (Underscoring
supplied)
On appeal by private respondent Distributors and Limcaco, the
Court of Appeals reversed Judge Dela Rama’s Order. The Court of Appeals found that it was not the intention of the
Makati RTC, through Presiding Judge Gerochi, to dismiss the entire Civil Case
No. 6023 when it had acted upon the affirmative defenses set out in private
respondents’ Answer. The appellate
court then remanded the case back to the RTC of Makati for further proceedings
on private respondents’ counterclaim.
Hence, this Petition for Review.
Petitioners maintain that the Court of Appeals committed the
following errors:
1.
x x x holding
that the order of dismissal in Civil Case No. 6023 dated February 20, 1985 did
not result in a dismissal of the case in its entirety.
2.
x x x holding
that the trial court did not lose its jurisdiction to hear and decide private
respondents’ compulsory counterclaim.
Petitioners insist that Judge De la Rama correctly set aside
the pre-trial settings because (1) the case was, in its entirety, dismissed by
the trial court on 20 February 1985 and there was, therefore, nothing to be
acted upon by Judge De la Rama nor anything on which evidence could be
received; (2) the 20 February 1985 Order dismissing the case had become final
and executory and could no longer be amended or modified; and (3) private
respondents’ counterclaim is
compulsory in nature and as such cannot remain pending for independent
adjudication. These arguments are
obviously inter-related and will be addressed together.
Under their first argument, petitioners direct this Court’s
attention to the phrase “above entitled case” found
in the dispositive portion of the Order of the RTC of Makati dated 20 February
1985. According to petitioners, as
phrased, this Order meant that all
claims submitted to
the trial court — petitioners’ claim as well as private respondents’
counterclaim — had been tried and adjudicated upon. Otherwise, petitioners continue, if Judge Gerochi had intended to adjudicate upon less then all the claims (i.e., only
on petitioners’ claim for a sum of money), he would have used the word “complaint”
rather than the word “case.”
The Court is not persuaded by this argument which appears to rest
far too much upon a single word found in the Order dated 20 February 1985. We do not believe that private respondents’
claims for damages can be evaded so simply
and casually.
We consider that what must be examined is not so much the use of
one word (“case”) rather than another single word
(“complaint”), but rather the events which preceded and the events
which immediately followed issuance of the Order of the RTC Makati dated 20
February 1985. In other words, that
Order must be viewed in the context of what had preceded it and what had
followed its rendition.
Firstly, on 4 September 1984, private respondents filed their
“Motion for Preliminary Hearing on Affirmative Defenses”
(underscoring supplied). In this
Motion, private respondents made very clear that they were talking about their
affirmative defenses as distinguished from their counterclaim, both of which
had been set out in their Answer. In this
Motion, accordingly, private respondents prayed that:
“x x x After
hearing, the instant complaint be dismissed.
Defendants [private respondents herein] likewise prayed for such
other and further reliefs as may be deemed just and equitable in the premises.”[5]
(Underscoring and brackets supplied)
Private respondents also expressly
pointed out that they were invoking the provisions of Section 5 of Rule 16
(“Motion to Dismiss”) of the Rules of Court which provide as follows:
“Sec. 5. Pleading Grounds as Affirmative Defenses. — Any of the
grounds for dismissal provided for in this rule, except improper venue, may be
pleaded as an affirmative defense, and a preliminary hearing may be had
thereon as if a motion to dismiss had been filed.” (Underscoring
supplied)
Secondly, private respondents
moved, on 7 March 1985, to set the case for hearing on their counterclaim. On 13 March 1985, however, Judge Gerochi of
the Makati RTC — the same Judge who had issued the Order of dismissal of 20 February
1985 — issued another order holding in abeyance the hearing on the
counterclaim of private respondents, “[i]t appearing that the above
entitled case has been appealed to the Honorable Intermediate Appellate Court, pending
resolution thereof, x x x.”[6]
Thirdly, after the records of the Collection case had been
remanded to the Makati RTC, the court of origin, private respondents filed a
motion asking the trial court to set the case for pre-trial conference with
respect to the counterclaim. Without opposition
from petitioners, the trial court set and reset the date for pre-trial several
times — 22 December 1987; then to an earlier date 10 December 1987; later to
28 January 1988; and finally to 10 March
1988. It was only on 7 March 1988 that
petitioners filed an opposition to private respondents’ motion to set for
pre-trial and counterclaim for damages.
Contemplation of the above events led the Court of Appeals to the
conclusion that Judge Gerochi, who was the Presiding Judge from the time the
Collection case was instituted and until the pre-trial conference on private
respondents’ counterclaim was set, did not intend to pass upon and resolve all
the claims (petitioners’ claim as well
as private respondents’ counterclaim) submitted in Civil Case No. 6023 when he
issued his Order of dismissal. The
Court of Appeals said:
“After a careful study, we hold for appellants, whose present
appeal is visited by merit. In the
light of the antecedent circumstances leading to the issuance of said order of
dismissal of February 20, 1985, let alone the order of March 13, 1985 delaying
the hearing of subject counterclaim in view of the pendency, at the time, of
plaintiffs’ appeal from said order of dismissal, and the fact that the trial
court reset several times for one reason or another, the scheduled hearing on
such counterclaim, the ineluctable conclusion is — that it was not the
intention of the trial court to dismiss the entire case, when it acted upon
appellants’ ‘Motion for Preliminary Hearing on Affirmative Defenses’; and in so
moving, defendants did not contemplate to do away with and sacrifice their
counterclaim. Obviously, the trial
court inadvertently and improperly used the word ‘case’ instead of ‘complaint’
in its subject order of dismissal under scrutiny; otherwise, if it was
really its purpose and disposition to dismiss the case, there would have been
no necessity for it to issue the said order of March 13, 1985 holding in
abeyance the hearing on defendants’ counterclaim. As a matter of fact, even after appellees lost with finality
their petition for review before the Supreme Court, involving the same order of
dismissal of February 20, 1985, the lower court had set appellants’
counterclaim for pre-trial, which assignment was reset several times for
various reasons but never was it opined in any of the orders of postponement
that subject counterclaim was already dismissed. Verily, we perceive a nagging indication that the trial court
was decided on subjecting appellants’ counterclaim to pre-trial and hearing,
after dismissing the complaint. But
unfortunately, the successor of Judge Nicolas Gerochi, Jr. failed to fathom and
implement the intentment of subject order of dismissal dated February 20,
1985.”[7]
(Underscoring supplied)
We agree with the Court of Appeals. Private respondents had clearly separated out their counterclaim
from their affirmative defenses and had asked for separate hearings on one and
on the other. This private respondents
were entitled to do so under Section 5, Rule 16 of the Rules of Court, quoted
earlier, and as well as under
Section 2 of Rule 31 which provides as follows:
“Sec. 2. Separate Trials. — The court, in
furtherance of convenience or to avoid prejudice, may order a separate trial of any claim,
cross-claim, counter-claim, or third party claim, or of any
separate issue or of any number of claims, cross-claims, counterclaims,
third party claims or issues.” (Underscoring supplied)
When Judge Gerochi issued his order
holding in abeyance the hearing on private respondents’ counterclaim for
damages, he in effect made clear that his 20 February 1985 Order dismissing
petitioners’ claim for collection was an order or judgment rendered after a
separate trial of petitioner’s claim. We consider that the Order of 20 February 1985 was effectively a
separate judgment which had as its subject matter only petitioners’ claim
for a sum of money asserted against private respondents. We believe also that Section 5 of Rule 36 of
the Rules of Court is applicable, at least by way of analogy:
“Sec. 5. Judgment at various stages. — When
more than one claim for relief is presented in an action, the court at any
stage, upon a determination
of the issues material to a particular claim and all counterclaims arising out
of the transaction or occurrence which is the subject matter of the claim, may
enter a judgment disposing of such claim. The judgment shall terminate the action with
respect to the claim so disposed of and action shall proceed as to the
remaining claims. In case a separate
judgment is so entered, the court by order may stay its
enforcement until the entering of a subsequent
judgment or judgments and may prescribe such conditions as are
necessary to secure the benefit thereof to the party in whose favor the
judgment is entered.” (Underscoring supplied)
We say “by analogy” considering
that Judge Gerochi had, as earlier noted, separated out petitioners’ claim for
collection from private respondents’ counterclaim for damages.
From a slightly different view point, private respondents’ motion
of 7 March 1985 for a hearing on their counterclaim for damages for wrongful
issuance of attachment, may be deemed to be in the nature of a reservation of
their right to litigate their counterclaim for damages, a reservation which prevented the dismissal of
their counterclaim along with the dismissal of petitioners’ claim for a sum of money.[8] This motion was filed promptly upon
rendition of Judge Gerochi’s Order of dismissal of 20 February 1985, that is to
say, long before that Order of dismissal became final and executory.
We do not believe that it is necessary to determine whether or
not private respondents’ counterclaim for damages arising from a wrongful
issuance of attachment is a “compulsory counterclaim,” or a
counterclaim which “can remain pending for independent adjudication by the
court,” within the meaning of Section 2, Rule 17 of the Rules of
Court. For there is a provision of the
Rules of Court which addresses
the specific kind of counterclaim here involved: Section 20 of Rule 57, which provides as follows:
“Sec. 20. Claim for damages on account of illegal
attachment. — If the judgment on the action be in favor of the party
against whom attachment was issued, he may recover, upon the bond given or
deposit made by the attaching creditor, any damages resulting from the
attachment. Such damages may be awarded
only upon application and after proper hearing, and shall be included in the
final judgment. The application must be
filed before the trial or before appeal
is perfected or before the judgment becomes executory, with due
notice to the attaching creditor and his surety or sureties, setting forth
the facts showing his right to damages and the amount thereof.
If the judgment of the appellate court be favorable to the party
against whom the attachment was issued, he must claim damages sustained during
the pendency of the appeal by filing an application with notice to the party in
whose favor the attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory. The appellate court may allow the application to be heard and
decided by the trial court.”
We agree, therefore, with petitioners’
argument that Section 20 of Rule 57 is applicable, but we do not consider that
Section 20 must be applied so strictly and literally as to obliterate the right
of private respondents to prove their counterclaim for damages. We believe, to the contrary, that under all
the circumstances of this case, there was at least substantial compliance with
the requirements of Section 20 of Rule 57. For neither Judge Gerochi of the Makati RTC nor Mr. Justice Caguioa of
the then Intermediate Appellate Court had resolved the entire case but had dismissed
simply petitioners’ claim for collection of a sum of money, the only claim
which Judge Gerochi had passed upon in his separate and partial 20 February
1985 Order and hence the only claim which Mr. Justice Caguioa could resolve
(along, of course, with the claim[s] raised in the appeal in the Declaratory
Relief case).
In reaching our above conclusion, we are moved by, among other
things, the fact that private respondents’ counterclaim for damages appears
meritorious. Indeed, both the Makati
RTC and the then Intermediate Appellate Court have already held that
petitioners were not entitled to the writ of preliminary attachment that
they had sought and obtained in the Collection case before the RTC of
Makati. Private respondents are,
therefore, entitled as a matter of fairness to prove the extent or amount of
such damages. Private respondents
complied with the requirements of our procedural law bearing upon this
matter. Upon the other hand,
petitioners’ substantial rights have not been adversely affected at all. Petitioners or their counsel could not have
been misled as to the meaning and effect of the partial Order of dismissal of
20 February 1985 and the Order of 13 March 1985 holding in abeyance the hearing
on the counterclaim. It is hardly
necessary to stress once more that procedural rules are designed, and must
therefore be so interpreted as, to give effect to lawful and valid claims and
not to frustrate them.
WHEREFORE, the Decision of the Court of Appeals dated 28
November 1991 in C.A.-G.R. CV No. 19440 is hereby AFFIRMED in toto. Costs against petitioners.
SO ORDERED.
Bidin, Romero, Melo, and
Vitug, JJ., concur.
[1]
Records, p. 48.
[2]
As quoted in the Decision in A.C.-G.R. CV No. 04324 and 06051; Rollo, p.
70.
[3]
Rollo, p. 44.
[4]
See Annex “F” of the Petition, Rollo, p. 74.
[5]
Rollo, p. 39.
[6]
Annex “D” of Petition for Review, Rollo, p. 44.
[7]
Rollo, pp. 112-113.
[8]
See, e.g., International Container Terminal Services, Inc. v. Court of
Appeals, 214 SCRA 456, 462 (1992).