G.R. No. L-27802. October 26, 1968
REPUBLIC OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. CENTRAL SURETY & INSURANCE COMPANY, ET AL., DEFENDANTS-APPELLANTS. CENTRAL SURETY & INSURANCE COMPANY, THIRD-PARTY PLAINTIFF…
CASTRO, J.:
On October 23, 1959
the Republic of the Philippines
(hereinafter referred to as the Republic) filed suit against the Central Surety
& Insurance Company (hereinafter referred to as the Surety) and the
latter’s manager of the bond department, Casimiro Mangoba. The
complaint recites (1) that the Surety executed in favor of the Deportation
Board a bond in the amount of P5,000 for the temporary release of Po Kee Kam, a Chinese citizen and
respondent in deportation proceeding no. 730, subject to certain conditions,
principal among which are that the Surety undertakes to have Po Kee Kam available at all times to
the Deportation Board within 24 hours from notice, that Po Kee
Kam shall be personally present before the
Deportation Board at all hearings in the case, and that upon his failure to
comply with any of the above conditions, the bond shall be automatically
confiscated and forfeited in favor of the Government; (2) that because Po Kee Kam failed to appear at the
hearing scheduled for December 14, 1962 despite due notice to the Surety, the
Deportation Board on the same date issued an order for his arrest, which same
order declared the bond confiscated in favor of the Government; (3) that by
letter of December 27, 1962, the Commissioner of Immigration informed the
Surety of the forfeiture of the bond and demanded the remittance to the Bureau
of Immigration of the amount of P5,000 on or before January 2, 1963; (4) that
notwithstanding repeated demands the Surety has failed to remit the said amount
without justifiable cause. Prayer is
made that judgment be rendered sentencing the Surety and Mangoba
to pay, jointly and severally, to the Republic the amount of P5,000, with
interest at the legal rate from the filing of the complaint until full payment,
and the sum of P1,000 as attorney’s fees and litigation expenses, plus costs.
On July 5, 1963 the Surety filed its answer, interposing inter
alia, the defenses (1) that its bond cannot be
made liable beyond the amount of P5,000; (2) that it is not liable for
attorney’s fees in the absence of any stipulation to that effect; (3) that the
court has no jurisdiction over the case as the amount involved is only P5,000; and (4) that the Republic has no
cause of action.
Mangoba’s answer, filed on July 11, 1963, makes substantially
the same averments and interposes the same defenses as those contained in the
Surety’s answer. In addition, he disclaims
personal liability under the bond.
On July 30, 1963 the Surety filed a third-party complaint, with
leave of court, against Po Kee Kam
and Tony Go (hereinafter referred to as the third-party defendants), alleging
that the Republic filed a complaint against it on the basis of a surety bond in
the amount of P5,000 issued in behalf of Po Kee Kam in favor of the Deportation Board; that for and in
consideration of the issuance of the said bond, the third-party defendants,
jointly and severally, executed an indemnify agreement in favor of the Surety
to indemnify it for damage, loss, costs, payments, advances and expenses of
whatever kind and nature which it might at any time incur as a consequence of
having executed the said bond. Prayer is
made that in the event judgment is rendered against it, the third-party
defendants be ordered, jointly and severally, to reimburse it whatever amount
it may be adjudged to pay plus interest of 12%, per a annum, compounded
quarterly, from the filling of the complaint until the whole obligation is
fully paid, 15% of the total amount due as attorney’s fees, and costs.
On September 7, 1963
the third-party defendants filed their answer, admitting some material
allegations of the third-party complaint, denying others, and interposing the
defense that the case is premature as the main case has not yet been
terminated.
On December 2, 1963
upon verbal motion of the third-party defendants, the trial court dismissed the
third-party complaint for lack of jurisdiction, in the following words:
“It appearing from the records that the third-party complaint
was filed after the passage of the new law conferring original jurisdiction on
the Municipal Court in civil cases involving not more than P10,000.00, and it
likewise appearing that the third-party complaint refers total claim of only
P6,000.00, the oral motion to dismiss filed by the counsel for the third-party
defendants is in order. Therefore, the
court hereby orders that the third-party complaint be, as it is hereby,
dismissed, without prejudice to the right of the third-party plaintiff to file
a separate case in the municipal court.”
On the following day, December
3, 1963, the trial court rendered judgment, ordering the Surety to
pay to the Republic the sum of P5,000, with interest thereon at the legal rate
from the date of the filing of the complaint until the whole amount shall have
been paid, plus costs, and absolving Mangoba from the
complaint.
The Surety forthwith interposed its appeal to the Court of
Appeals from the order of December 2, 1963 dismissing its third-party
complaint, and from the decision of December 3, 1963 ordering it to pay the
Republic the amount of P5,000, contending that the trial court erred in (1)
holding the Surety liable on the bond despite the fact that it has not violated
any condition thereof, (2) not declaring itself without jurisdiction over the
subject-matter of the action, and (3) dismissing the third-party
complaint. The Court of Appeals
certified the case to this Court on May
10, 1967, pursuant to section 2, Article VIII of the Constitution,
and section 17(3) of Republic Act 296, on the ground that the jurisdiction of
the trial court is squarely in issue.
By formulation of the Surety, the issues tendered for resolution
in this appeal are: (1) Is the Surety liable on its bond? (2) Did the trial court have jurisdiction over
the subject-matter of the main action?
(3) Did the trial court have jurisdiction over the third-party
complaint?
1. Upon the first
issue, it is argued that the Surety is not liable on its bond because the two
conditions thereof – that there must be notice to it by the Republic to produce
the person bonded, and that the latter fails to appear as required in the
notice – did not come to pass. Hence,
the forfeiture of the bond is unwarranted.
This pretense of the Surety is palpably without merit. Exhibit B[1]
unequivocally shows that the Surety received notice to produce the person of Po
Kee Kam; in point of fact
the Surety even orally moved “for the postponement of the production of
respondent Po Kee Kam,”
which motion was denied in the order of December 14, 1962 of the Deportation Board. It would have been pointless to ask for
postponement to produce the person of Po Kee Kam, if the Surety did not receive notice to that
effect. At all events, the trial court
found that the Surety and Mangoba “were duly
notified to produce the said Po Kee Kam before the Deportation Board on December 14, 1962, but the said Po Kee Kam failed to appear.”
This finding of the trial court is entitled to respect, being fully supported
by the evidence of record.[2]
The trial court therefore did not err in ordering the Surety to
pay to the Republic the sum of P5,000, with interest thereon at the legal rate
from the date of the filing of the complaint until full payment thereof, plus costs.
2. Upon the second
issue, it is insisted that the trial court had no jurisdiction over the
subject-matter of the action because the total amount involved is only P6,000
(P5,000 under the bond and P1,000 as attorney’s fees), a court of first
instance being vested with jurisdiction only over cases in which the demand,
exclusive of interest, or the value of the property in controversy, exceeds
P10,000, pursuant to section 44 of Republic Act 296, as amended by Republic Act
3828 which took effect on June 22, 1963.
Although the present action was filed on June 20, 1963, two days before
the effectivity of Republic Act 3828 which broadened
the jurisdiction of municipal and city courts to include cases in which the
demand, exclusive of interest, or the value of the property in controversy,
does not exceed P10,000,[3]
it is nonetheless argued that the court’s jurisdiction over the case was lost
on June 22, 1963, when Republic Act 3828 took effect, and therefore the case
should have been remanded to the municipal court.[4]
We disagree. It is not
disputed that the trial court acquired jurisdiction over the subject-matter on
June 20, 1963 when the
complaint was filed with it. It is of no
moment that summons was served and that the case was heard and decided after
the effectivity of Republic Act 3828, because the
rule is firmly entrenched in our law that jurisdiction once acquired continues
until the case is finally terminated.[5]
3. Upon the third
issue, the Surety takes the position that if the trial court acquired
jurisdiction over the main case, “it follows that it could also take
cognizance of the third-party complaint which derives its life from the
complaint.”
The Surety has a point here.
It is true that the third-party complaint was filed after the effectivity date of Republic Act 3828. It is likewise true
that the demand therein made does not exceed P10,000, and, therefore, is not
within the jurisdiction of the Court of First Instance if it were
an independent action. But the third-party complaint is an ancillary suit which depends on the
jurisdiction of the court over the main action. Since the trial court had acquired
jurisdiction over the complaint, it necessarily follows that it likewise had
jurisdiction over the third-party complaint which is but an incident
thereof. This must be so because jurisdiction
over the main case embraces all incidental matters arising therefrom
and connected therewith.[6] A
contrary rule would result in “split jurisdiction” which is not
favored,[7]
and in multiplicity of suits, a situation obnoxious to the orderly administration
of justice.[8]
The court acquired jurisdiction over the third-party complaint, provided it had
jurisdiction over the main case, for the reason that the third-party complaint
is but a continuation thereof, its purpose being to seek “contribution,
indemnity, subrogation or any other relief, in respect to his opponent’s claim.[9]
“Thus, in Talisay-Silay Milling Co.,
et al. vs. CIR, et al.,[10]
this Court elaborated with incisiveness:
“‘The third-party complaint is but a continuation of the main
action, its purpose being merely to seek ‘contribution, indemnity, subrogation
or any other relief, in respect of his opponent’s claim.’ (Rule 6, Sec. 12.)
The aim is to avoid the actions which should be tried together to save the time
and cost of a re-duplication of evidence, to obtain consistent results from
identical or similar evidence, and to do away with the serious handicap to a
defendant of a time difference between a judgment against him and a judgment
in his favor against the third-party defendant.
“Thus it has been held that ‘where a court has jurisdiction of
a claim and the parties in the principal action, it generally has jurisdiction
also of a suit or proceeding which is a continuation of or incidental and
ancillary to the principal action, even though it might not have jurisdiction
of the ancillary proceeding if it were an independent and original action or
proceeding. The jurisdiction of the
ancillary suit or proceeding is referrable to or
dependent upon the jurisdiction of the court over the principal suit or
proceeding.’
“Petitioners urge that a rule similar to the rule on
counterclaims be adopted. But a
third-party complaint cannot be likened to a counterclaim which must be within
the jurisdiction of the court trying the main case, because unlike a third-party
complaint, a counterclaim ‘need not diminish or defeat the recovery sought by
the opposing party, but may claim itself exceeding in amount or different in
kind from that sought in the opposing party’s claim. (Rule 6, Sec. 6). A third-party complaint may likewise be
likened to a cross claim under Rule 9, section 5. x x x The principle is at once apparent, namely, that where an
action is ancillary to a main action over which a court has jurisdiction, no
independent jurisdiction is needed to enable the court to take cognizance of
the ancillary action.”
There can therefore be no doubt that in dismissing the Surety’s
third-party complaint the trial court committed a reversible error.
4. The Surety prays for the
remand of the third-party complaint to the trial court for further
proceedings. It is our view that under
the environmental circumstances, there is no need to do so. The third-party defendants did not
specifically deny the execution of the indemnity agreement. They merely expressed insufficient knowledge
and information to form a belief as to the veracity thereof, without setting
forth “the substance of the matters” upon which they rely to support
their denial as required by the Rules.[11]
To obviate further litigation between the Surety and the third-party
defendants, this Court now decides the third-party complaint on the merits, and
orders the third-party defendants to reimburse the Surety the amount of the
judgment against it. The pleadings on
record fully support this adjudication.[12]
ACCORDINGLY,
the order dated December 2, 1963 dismissing the third-party complaint is set
aside; the decision dated December 3, 1963 is modified in the sense that the
third-party defendants are hereby ordered to pay to the Surety whatever sums
the latter will pay to the Republic by virtue of the judgment appealed
from. Costs are assessed against the
Surety in favor of the Republic, and against the third-party defendants in
favor of the Surety.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Sanchez,
Angeles, Fernando, and Capistrano, JJ., concur.
Zaldivar, J., on leave.
[1] p.
2, folder of exhibits.
[2]
The rule is that the findings made by the trial court must be accepted, unless
it is shown that they are unfounded or were arbitrarily arrived at, or that said
court had failed to consider important evidence to the contrary. (Lapina vs.
Court of Agrarian Relations and Calinisan, L-20706,
Sept. 25, 1967, 1967C PHILD 745, 21 SCRA 194).
[3]
Sec. 88, Rep. Act 296, as amended by Republic Act 3828, effective June 22, 1963.
[4] The
Surety’s syllogism runs as follows: “x
x x The total demand of
plaintiff-appellee is only P6,000.00, and therefore,
within the jurisdiction of the Municipal Court in accordance with Rep. Act No.
3828. The complaint was filed on June 20, 1963, summons was served to
defendant-appellant on June 25, 1963,
the case was tried on December 2, 1963
and decision was rendered on December
3, 1963. By virtue of
Republic Act 3828, the court lost jurisdiction over the case on June 22, 1963 when the said act took
effect. At the time therefore, when the
defendant-appellant was served with summons and when the case was tried and
decided, the court has no more jurisdiction over the subject-matter. The case should have been remanded to the
Municipal Court. The trial court
therefore, erred in taking cognizance of the case even after it has lost
jurisdiction over it.”
[5] Pamintuan vs. Tigalo, 53
Phil. 1; Philippine Land-Air-Sea Labor Union (PLASLU), Inc. vs. CIR, 93
Phil. 747; Tuvera vs. de Guzman, L-20547,
April 30, 1965; Rizal Surety, Inc. vs. Manila
Railroad Company, L-20875, April 30, 1966; Insurance Co. of North America vs.
U.S. Lines, Co., et al., L-21021, May 27, 1966; and People vs. Paderna, L-28518, Jan. 29, 1968, 1968A PHILD 261, 22 SCRA
273.
[6] Philippine
Products Co., et al. vs. Court of Appeals, et al., L-20308, Nov. 15, 1967, 1967D PHILD 368, 21
SCRA 870.
[7]
Bay View Hotel, Inc. vs. Manila Hotel Workers’
Union-PTGWO, L-21803, Dec. 17, 1966.
[8]
Association of Labor Unions vs. Gomez, et al., L-25999, Feb. 9, 1967, 1967A PHILD 240, 19 SCRA
304.
[9]
Section 12, Rule 6 of the Revised Rules of Court specifically provides:
“Third-party complaint. – A third-party complaint is a claim that a
defending party may, with leave of court, file against a person not a party to
the action, called the third-party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponent’s claim.”
[10]
L-21582, November 29, 1966.
[11]
Sec. 10, Rule 8, Revised Rules of Court.
[12] The
Supreme Court has on several occasions resolved actions on the merits, instead
of remanding them to the trial court for further proceedings, as where the ends
of justice would not be subserved by the remand of
the case (Francisco and Francisco vs.
The City of Davao, et al., L-20654, Dec. 24, 1964),
or where public interest demands an early disposition of the case (Republic vs. Security Credit and Acceptance
Corporation, et al., L-20583, Jan. 23, 1967, 19 SCRA 58, 1967A PHILD 59). And in Samal
vs. Court of Appeals (L-8579, May
25, 1956, 99 Phil. 230), where the order of dismissal was reversed on appeal,
this Court, instead of remanding the case for further proceedings, decided it
on the merits on the basis of the evidence on record. It was there pointedly declared that: “Ordinarily when an order of dismissal
issued by the trial court is reversed on appeal the case is remanded to said
trial court for further proceedings, particularly for the reception of
evidence. But when the trial court had
already received all the evidence presented by both parties, consequently, the
Court x x x is in a
position to pass upon said evidence and decide the case on its merits and there
is no necessity for remanding the case to the trial court for further proceedings.”