THE BACOLOD-MURCIA PLANTERS’ ASSOCIATION, INC., PLAINTIFF AND APPELLEE, VS. VICENTE CHUA, DEFENDANT AND APPELLANT.

Bacolod-Murcia Planters' Association versus Chua

The Case

This is a civil action for the recovery of a sum of money, brought by the Bacolod-Murcia Planters' Association, Incorporated, as sole plaintiff, against Vicente Chua, to recover an amount the defendant had deducted from the purchase price of sugar. The case matters for a single, narrow, and highly examinable reason: it is the classic authority on the award of costs, holding that the payment of costs rests entirely upon the discretion of the courts, and that an appeal whose only purpose is to interfere with that discretion will not prosper. The appeal here is directed not against the dismissal of the case, but solely against the trial court's refusal to adjudge costs.

Procedural History

The action was commenced by complaint in the Court of First Instance of Occidental Negros. On the strength of the complaint and an allegation that the defendant was about to dispose of his properties to defraud his creditors, the plaintiff caused the defendant's deposit in the Philippine National Bank to be garnished. The defendant moved to lift the garnishment and to dismiss the complaint, alleging that the sugar was bought by him directly from the individual planters and not from the plaintiff association. The plaintiff's counsel then filed an amended complaint joining the individual planters as plaintiffs and reducing the total claim. The trial court lifted the garnishment and refused to admit the amended complaint, on the ground that while the total amount sought came under the jurisdiction of the Court of First Instance, the individual claims, none of which amounted to 200 pesos, were each within the exclusive original jurisdiction of the justice of the peace court. Thereafter, on motion of the defendant and with the conformity of the plaintiff's counsel, the court ordered the dismissal of the case, but without costs. The defendant moved for reconsideration, which was denied. The defendant then appealed to the Supreme Court, and the appeal is directed solely against the refusal to adjudge costs.

Facts

The Bacolod-Murcia Planters' Association, Incorporated, as sole plaintiff, sued Vicente Chua for the recovery of 2,373 pesos, which the defendant had deducted from the purchase price of sugar alleged to have been bought by him from the plaintiff. The deduction was made on the supposition that the defendant was to pay the export duties levied by the city of Bacolod on the sugar, but those export duties were later annulled by the courts, with the result that the amount the defendant had paid was supposedly refunded to him later.

On the strength of the complaint and the allegation that the defendant was about to dispose of his properties to defraud his creditors, the plaintiff garnished the defendant's deposit in the Philippine National Bank to the extent necessary to insure payment of the claim. The defendant alleged that the plaintiff had no cause of action against him because the sugar was bought by him directly from the individual planters and not from the association, and he moved to lift the garnishment and to dismiss the complaint.

As a counter-move, the plaintiff's counsel filed an amended complaint joining the individual planters as plaintiffs and reducing the total claim, including that of the association, to 1,121 pesos and 98 centavos. In view of the facts revealed by the amended complaint, the court lifted the garnishment. The court also refused to admit the amended complaint, because while the total amount sought came under the jurisdiction of the Court of First Instance, the individual claims, none of which amounted to 200 pesos, were each within the exclusive original jurisdiction of the justice of the peace court. Thereafter, on motion of the defendant and with the conformity of the plaintiff's counsel, the court ordered the dismissal of the case, but without costs. The motion for reconsideration was denied, and the defendant appealed.

Issues

• Whether or not the lower court committed a reversible error when it denied costs to the defendant.
• Whether or not an appeal will lie whose sole purpose is to interfere with the trial court's discretion in the matter of costs.

Applicable Provisions

Section 1 of Rule 31 of the Rules of Court provides:

Costs shall be allowed to the prevailing party as a matter of course, unless the court, for special reasons, shall adjudge that either party shall pay the costs of an action, or that the same be divided, as may be equitable.

This provision is the textual anchor of the ruling: it makes the allowance of costs the general rule, but expressly preserves to the court the power, for special reasons, to order otherwise.

Ruling

On the first issue, the Court held that the lower court did not commit a reversible error in denying costs to the defendant. Although costs are generally allowed to the prevailing party as a matter of course, courts are nevertheless empowered, for special reasons, to adjudge that either party shall pay the costs of an action, or that the same be divided, as may be equitable. The Court quoted the rule:

Although costs are generally allowed to the prevailing party as a matter of course, courts are nevertheless empowered, for special reasons, to adjudge that either party shall pay the costs of an action or that the same be divided, as may be equitable.

In practice, the Court said, this power has been translated into the proposition that payment of costs is a matter that rests entirely upon the discretion of courts. The Court found the special reason in the trial court's order of August 16, 1947, which stated that the order of dismissal was issued with the conformity of the plaintiff entity given in open court, which the court considered a special reason for making no special pronouncement as to costs. The Court added that the pleadings disclosed a valid cause of action against the defendant, who, on the facts alleged, is legally under obligation to refund certain sums to which he is not entitled; the mistake was in asserting the cause of action in favor of the association alone without naming the individual planters as co-plaintiffs or pleading facts sufficient to show that the action was brought in the name of all the real parties in interest.

On the second issue, the Court held that an appeal would hardly lie whose purpose is to interfere with that discretion, citing the rule forbidding appeals from decrees for costs only, which is easily deducible from the discretion vested in the trial court in fixing them, and the better opportunity of that court to exercise that discretion from its greater intimacy with the details of the pleadings, hearings, and orders in the case.

Doctrine

Payment of costs is a matter that rests entirely upon the discretion of the courts. While costs are generally allowed to the prevailing party as a matter of course, the court may, for special reasons, adjudge that either party shall pay the costs, or that the same be divided, as may be equitable. An appeal will not lie whose sole purpose is to interfere with the trial court's exercise of that discretion, because that court has the better opportunity to exercise it from its greater intimacy with the details of the pleadings, hearings, and orders in the case. The conformity of the prevailing party to the dismissal may itself supply the special reason for denying costs.

Disposition

The order appealed from was affirmed, with costs against the appellant, Vicente Chua.

Remember This

The single line worth memorizing is that payment of costs rests entirely upon the discretion of the courts, and an appeal taken solely to interfere with that discretion will not lie. Examiners use this case to test the rule on costs under Rule 31, and to test whether a candidate knows that the general rule allowing costs to the prevailing party yields to the court's discretion for special reasons.