REPUBLIC OF THE PHILIPPINES, PLAINTIFF AND APPELLEE, VS. LUCAS P. PAREDES, ET AL., DEFENDANTS. GLOBE ASSURANCE COMPANY, INC., DEFENDANT AND APPELLANT.

The Globe Assurance Company, Inc. is appealing the decision of the
Court of First Instance of Manila in Civil Case No. 20689 for the
latter’s failure or refusal to render judgment on its cross-claim.

On September 20, 1956, plaintiff Republic of the Philippines
commenced an action against defendants Lucas P. Paredes, Aurora C.
Paredes and appellant Globe Assurance Company for the recovery of the
amount of P48,529.19, representing unpaid taxes and for the
confiscation of Globe Bond No. 1226, issued by the defendants in favor
of the Bureau of Internal Revenue. In its amended answer which was
accepted by the trial court, appellant company included a cross-claim
against Lucas and Aurora, alleging that they had bound themselves to
indemnify it (company) for any damages which it may sustain as a result
of the execution of said bond, and praying that in case judgment was
rendered against it on the complaint of plaintiff, Lucas and Aurora be
condemned in the same judgment jointly and severally to indemnify it in
the same amount as that of the judgment.

Lucas and Aurora were declared in default and evidence against them
was presented by plaintiff. Appellant company likewise presented its
evidence on the cross-claim against Lucas and Aurora. The case between
the plaintiff-appellee and defendant-appellant was submitted on a
question of law. After hearing, the trial court, on March 28, 1957
rendered a decision without however any judgment on appellant’s
cross-claim. For purposes of reference, we reproduce the said decision:

“This is an action presented by the Republic of the
Philippines to collect from the defendants the amount of P48,529.13 for
back taxes.

“The evidence in this case shows that on January
22, 1955, the defendants Lucas P. Paredes and Aurora C. Paredes
executed an ordinary bond for the payment of taxes in favor of the
Republic of the Philippines in the amount of P53,529.13. This bond was
furnished by the defendant Globe Assurance Company, Inc. The condition
of the said bond is that the defendant will pay to the Republic of the
Philippines the amount above-stated, representing the income tax
obligation of defendant spouses Lucas P. Paredes and Aurora C, Paredes,
including the corresponding surcharges and interests and that in
default thereof, the Globe Assurance Company, Inc. assumed and promised
to pay the said amount. With the exception of the initial payment of
P5,000.00 the defendants Lucas P. Paredes and Aurora C. Paredes have
made no further payment to the Republic of the Philippines. By reason
thereof they are still indebted to the plaintiff in the amount of
P48,529.13. Demands have been made upon the defendants to pay the said
obligation but they have failed up to the present to pay the same.

“In
view of the foregoing, judgment is hereby rendered in favor of the
plaintiff and against the defendants, ordering the defendants Lucas P.
Paredes and Aurora C. Paredes to pay to the Republic of the Philippines
the amount of P48,529.13, plus interests, and that in case of their
failure to do so, the bond furnished by defendant Globe Assurance
Company, Inc., Globe Bond No. 1226, is hereby ordered confiscated and
forfeited in favor of the plaintiff. With costs against defendants.”

On May 2, 1957, within the reglementary period, appellant filed a
notice of appeal, an appeal bond and a motion to extend the period
within which to file the record on appeal. On May 7, 1957, appellant
filed a motion for reconsideration of the decision, praying that the
court render judgment on its cross-claim. On May 15, 1957, the trial
court granted the motion for extension but denied the motion for
reconsideration on the ground that it was filed out of time. The appeal
was taken directly to this Court.

Appellant assigns only one error, namely, “the lower court erred in
refusing to render judgment on the cross-claim of defendant-appellant”.
The Solicitor General filed no brief for the appellee, Republic of the
Philippines, on the ground that whatever be the outcome of appellant’s
appeal, its adjudicated rights would not be affected.

Although appellant is appealing the judgment of the trial court,
nevertheless, it does not either in its brief or in its memorandum in
lieu of oral argument, question the said judgment in so far as it
orders confiscation of its bond in the event its codefendants Lucas and
Aurora fail to pay the same judgment credit. It does not controvert the
decision in favor of the plaintiff. Its main argument or contention is
that the trial court should have rendered judgment on its cross-claim
against its codefendants and specially after its attention was called
to said error by its motion for reconsideration. It admits that said
motion was filed beyond the thirty day period. It contends, however,
that the court could still act on said motion and render judgment on
the cross-claim for the reason that its appeal had not yet been
perfected at the time because the record on appeal had not yet been
filed and approved. Moreover, it claims that since there was no written
or verbal judgment on his cross-claim, it could properly ask that
judgment be rendered thereon, even if the decision in the main case had
already become final.

It is clear that the trial court erred in not passing upon and
determining the, cross-claim. The filing of a cross-claim is provided
for in Rule 10, Sections 2 and 8 of the Rules of Court, the purpose
being to settle in a single proceeding all the claims of the different
parties against each other in the case in order to avoid multiplicity
of suits. And appellant evidently did just that to avoid multiplicity
of suits; otherwise, it would have had to file a separate action
against its codefendants for indemnity for any damages arising from the
execution of the bond. In fact, the filing of the cross-claim was
permitted by the trial court. Inasmuch as the codefendants were
declared in default, the evidence presented by the defendant-appellant
was not controverted, and the case was submitted on a question of law.
It was just a question of examining the exhibits presented, by the
defendant-appellant, which were the bond itself, the paragraph on
indemnity, and the payment of interest in case of delay, in payment, as
well as the different letters of demand made by the defendant-appellant
on its codefendants. We are willing to presume that the trial court
merely overlooked or forgot the cross-claim, concentrating its
attention on the main case or on the claim of the Republic of the
Philippines against the three defendants.

As to what the trial court could have done to correct this error,
the members of this Tribunal are not in complete agreement. Some
believe that it could have corrected its error or omission after its
attention was called to it by the motion for reconsideration. True,
said motion was filed more than thirty days after notification of
judgment. However, it was still within the discretion and jurisdiction
of said court to amend its decision, considering that the record on
appeal had not yet been approved, the record being still in its custody
and it had not yet lost jurisdiction over the case.

“And since judges are human, susceptible to
mistakes, and they are bound to administer justice in accordance with
law, they are given the inherent power of amending their orders or
judgments so as to make them conformable to law and justice, and they
can do so before they lose their jurisdiction of the case, that is
before the time to appeal has expired and appeal has been perfected.”
(Moran, Comments on the Rules of Court, Vol. 3, 1957 ed., pp. 603-04,
and authorities cited therein).

Other members of the Tribunal however, are of the opinion that after
the expiration of the thirty days after notification of the judgment,
the latter had become final and the trial court was powerless to
correct its error by modifying the judgment so as to include in it the
determination of the cross-claim, this, despite the fact that the
appeal had not yet been perfected because the approval of the record on
appeal was still lacking, and that consequently, the records of the
case were still in the custody of the court. All the members, however,
are unanimous in the holding that inasmuch as the notice of appeal, the
corresponding appeal bond and the record on appeal were all filed
within the reglementary period, the said judgment was still open to
appeal to this Tribunal, which by reason of its appellate jurisdiction
could and should correct the error. Instead of remanding the case to
the trial court so that it may correct its error by passing judgment on
the cross-claim, to save time, the case being about four years old, and
in the interest of justice, we propose to make the correction ourselves.

In view of the foregoing, the appealed decision is hereby modified by adding the following paragraph:

On the cross-claim of appellant, judgment is hereby rendered
ordering defendants Lucas P. Paredes and Aurora C. Paredes to pay
appellant jointly and severally the amount equivalent to 15 per cent of
the judgment as indemnity for damages, plus interest thereon at 12 per
cent interest per annum on said indemnity, from the date this judgment
becomes final, plus costs. And in the event that appellant pays the
judgment debt to the Republic of the Philippines defendants Lucas P.
Paredes and Aurora C. Paredes are also hereby ordered jointly and
severally to reimburse appellant the amount so paid. Defendants Lucas
P. Paredes and Aurora C. Paredes will pay the costs in both instances.

Paras, C J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Endencia, Barrera, and Gutierrez David, JJ., concur.