FULTON INSURANCE COMPANY, PLAINTIFF-APPELLEE, VS. MANILA RAILROAD COMPANY, ET AL., DEFENDANTS?APPELLANTS.

An appeal from the decision of the Court of First Instance of Manila,
in Civil Case No. 53457, dated September 30, 1964, as amended by its order
dated December 1 of the same year, ordering the defendants Manila Railroad Company and
Manila Port Service to pay to the plaintiff Fulton Insur­ance Company the amount of P4,701.20
representing the value of Certain lost goods,
P500.00 by way of attorney’s fees, and costs – said
defendants assailing the decision and order aforementioned on grounds of
prescription and lack of jurisdiction.

The law questions involved are disclosed in the following resume
of the antecedent facts of the case.

On August 1, 1961,
fifty-one cartons listing adding machines and three cartons advertising matters
were shipped by the Vamco Intercontinental, Ltd. at San
Francisco, California thru the
SS President Grant to Marsman & Company at Manila
as consignee.  The vessel arrived at the port
of Manila on August 25, 1961, and on the same day, discharged
the shipment un­to the custody of the Manila Railroad Company and Ma­nila Port
Service, arrastre operators.  On August
30, 1961, the consignee filed a “provisional claim” for
damages against both the ship owners and the arrastre
operators.  The Manila Railroad Company
and Manila Port Service subsequently delivered the goods to the consignee, but
of the fifty-one cartons listing adding machines, only twenty-seven (27)
together with the three cartons advertising matter were actually re­ceived by
the Marsman & Company on September 18, 1961; and
out of the twenty-four missing cartons, seven were later recovered by the
Manila Police Department, leav­ing seventeen cartons unaccounted for.  As insurer of the shipment, the Fulton
Insurance Company paid to the consignee, the value of the lost listing adding
ma­chines, and was thereby subrogated to the rights of the consignee.  Defendants having refused or failed to pay
the value of the lost goods, Fulton Insurance Com­pany commenced action in the
Court of First Instance of Manila on July 23, 1962, suing alternatively both
the carrier and the arrastre operators for recovery
of P4,701.20 representing the value of the lost
listing adding machines and attorney’s fees in the sum of P250.00.  It is alleged in the complaint among others,
that the loss of the seventeen cartons listing adding machines was due either
to the negligence of the ship­ping company or the arrastre
operators, the Manila Rail­road Company and Manila Port Service.  This case was docketed as No. 51017 of the Court of First Instance of
Manila.

On January 31, 1963, the court dismissed the case as against the Manila
Railroad Company and Manila Port Service upon a “motion to dismiss” of said defendants, the court declaring itself without jurisdiction over
the subject-matter of the action because the amount claimed was less than
P5,000.00 which properly falls within the jurisdiction of the City Court of
Manila.  A motion for reconsideration of
the order filed
by the plaintiff having been denied, Fulton In­surance Company on March 20, 1963, filed a new com­plaint
in the same court against the Manila Railroad Company and Manila Port Service,
reproducing the alle­gations made in the first case, except that the demand for
attorney’s fees was increased from P250.00 to P500.00.  This case was docketed as No. 53457 of the
court.

Defendants Manila Railroad Company and Manila Port Service
answered in due time denying all the material allegations of the complaint, at
the same time interposing a special defense that “the claim has be­come
time-barred and/or prescribed for the failure of the consignee or its
representative to file the claim for the value of the
cargoes allegedly lost within fifteen (15) days from the date the last package was
discharge from the carrying vessel; and/or its failure to file suit within one
(1) year from said date of dis­charge.”

On
September 30, 1964, the trial court, after a joint hearing of the two cases,
rendered a decision, dismissing the complaint in Civil Case No. 51017, absolving the
defendant American President Lines, Ltd. of any liability; but in Civil Case
No. 53457, ordered the defendants
Manila Railroad
Company and Manila Port Service
to pay Fulton Insurance Company the sum of P500.00 plus the additional sum of
P500.00 as attorney’s fees, and the costs. 
The plaintiff received notice of the decision on October
7, 1964.

On October 12, 1964,
plaintiff filed a motion for reconsideration of the decision without setting the same for hearing, which
was supplemented however, by a “motion to set”, dated November 1, 1964, setting the aforesaid motion for reconsideration
for hearing on November 14,
1964.  Defendants opposed the
motion.  In an order dated November 18, 1964, the court denied the motion declaring
itself without jurisdiction to pass upon the same after the 30-day period for
appeal.  Upon a motion for reconsideration
of this last order, the court, on December 1, 1964, amended the decision of
September 30, 1964, and ordered the defendants to pay to the plaintiff the
sum of P4,701.20 plus the additional sum of P500.00 as attorney’s fees, and the costs. 
Defendants appealed.

Appellants contend that the claim of Fulton Insurance Company has
prescribed.  It is pointed
out that the goods in question were discharged from the carrying vessel on
August 25, 1961, while the com­plaint (Case No. 53457) was filed on March 20,
1963, or one year and seven months later; and since under Section 15 of the
Management Contract, it is provided  “x x x in any event the CONTRACTOR (appellants herein) shall be
relieved and released of any and all responsibility or liability for loss,
damage, misdelivery and/or non-delivery of goods,
unless suit in the court of proper jurisdiction is brought within a period of one(1) year from the date of the
discharge of the goods”, the action has become time-barred.  Appel­lee meets the
argument by maintaining that it actually complied with the requirement in the
said contract by filing Civil Case No. 51017 in the Court of First Instance of
Manila on July 23, 1962; that although the case was dismissed as against herein appellants, it subsequently filed Civil Case No. 53457
in the same court before the dismissal became final; and since the cases were
tried jointly, Civil Case No. 53457 should be considered as a continuation of Civil Case No. 51017 and both cases deemed filed within
the required period.

Neither contention is correct.

1. The Court of First Instance of Manila
is the court of proper jurisdiction.  It
may not be seriously debated
that appellee was right in suing herein appell­ants
and the American President Lines as alternative defendants under alternative
causes of action in the first case (No. 51017). 
Such procedure is expressly sanctioned by law.^[1]  The prevailing rule is that a consignee, when
uncertain of the place and time of the loss or damage to its goods, may in one
case seek re­lief alternatively, against the arrastre
operators un­der a contract of deposit and the steamship company under a contract
of carriage by sea.  The action calls for
the exercise of admiralty jurisdiction, which muni­cipal courts do not have,
and is within the original exclusive jurisdiction of courts of first instance;^[2]
and since Sec. 5, Rule 2 of the Rules of Court permits the joinder
of causes of action in the alternative, it follows that even if one of the
causes of action were within the exclusive jurisdiction of a lower
court by reason of the amount of the demand involved,^[3] the Court of First Instance of Manila has
jurisdiction over both.^[4]  The
Court of First Instance of Manila is
the court of proper jurisdiction contemplated in the Management Contract
aforementioned.  The Court, therefore,
should not have dismissed the case as against herein appellants although the
amount of the claim against them was less than P5,000.00.

2. The second case (No.
53457) filed against herein appellants was not time-barred, although it
may not legally be considered as a continuation
of Civil Case No. 51017.  The rule
that the subsequent abandonment or dismissal of an action other than on the
merits, takes no time out of the period of prescription,^[5] is not applicable
to the case at bar by reason of the provisions of Article 1155 of the new Civil Code which expressly provides that the prescription of actions is interrupted when
they are filed be­fore the court.^[6]  Such interruption took place in this
case when the first action was filed in the Court of First Instance of Manila
which, as previously
pointed out above, was the court of proper jurisdic­tion contemplated in the Management Contact,
taking into consideration the allegations of the complaint filed in that
case.  That interruption lasted during
the pendency of the action,^[7]
until the order of dismissal for alleged lack of jurisdiction became final.^[8]  From the discharge of the goods on August 25,
1961 to the filing of the complaint, Civil Case No. 51017, on July 23, 1962, appellee then had
one (1) month and two (2) days left of the one-year prescriptive period
provided for in the Management Contract. 
That case was dismiss­ed as against herein appellants
on January 31, 1963; and on
February 22, 1963, appellee filed a motion for reconsideration of the order of
dismissal
which was de­nied on March 4,
1963.  The record fails to
show when the plaintiff received notice of the order of denial of the
reconsideration.  Assuming, nonetheless,
that the plaintiff received notice thereof on the same date, that is, on March 4, 1963, it had eight (8) days
left within which to perfect an appeal; but as no appeal was taken therefrom,
the order of dismissal became final on March
12, 1963.  That date,
therefore, was the starting time when the period of prescription commenced to
run again.  Consequently, from March 12, 1963 to March 20, 1963, when the
complaint docketed as Civil Case No. 63457 was filed, only eight days of the
more than one month left of the prescriptive period had again elapsed.  Clearly, therefore, the second action was not
time?barred.

There are two school of thoughts as to
the legal effect of the cessation of the interruption by an in­tervening action
upon the period of prescription.  There is the view expressed and perhaps,
not without reasons, that the full
period of prescription should start to run anew, reckoned from the date of the cessa­tion of the
interruption.^[9]  The contrary view is, that the cessation of
the interruption merely tolls the running of the remaining
period of prescription, deducting from
the full period thereof, the time that has already elapsed prior to the filing
of the intervening
action.^[10]  Nevertheless,
all discussion on this point is academic; considered in the light of either
view, We find that the second action is not barred.

Finally, appellants maintain that the court be­low, acted without
jurisdiction in issuing the order of December
1, 1964, amending the decision of September 30, 1964. 
It is pointed out that
the plaintiff received notice of the decision on October 7, 1964, and, there­fore,
the period of appeal would expire on November 6, 1964; that while it is true the plaintiff filed a mo­tion for reconsideration of the
decision of October 12, 1964, however, as it did not contain a notice of
the date and place of hearing thereof, the motion for reconsideration did not
suspend the running of the period for appeal; and when said motion was implemented by a “mo­tion to set”
dated November 11, 1964, setting it for hearing on November 14, 1964, the
period for appeal had already elapsed. 
Hence, the court had no more jurisdic­tion to entertain the motion for reconsideration.

We find the position
taken by the appellants on this particular point to be meritorious.  The present provision of section 2 of Rule 37
construed in relation to sections 4, 5 and 6 of Rule 15 of the Rules of Court
provides that a written notice of a motion for new trial shall be served by the movant on the adverse
party stating the time and place of the hearing thereof, and the court shall
not act upon the motion without proof of such notice.  Said provision repealed the provision of
section 146 of the old Code of Civil Procedure and the rulings founded thereon,^[11] to the effect that the notice must be served
by the court on the adverse party.^[12]  The
notice therein required is now mandatory, and the failure of herein appellee to give notice of the time and place of hearing of
the motion it filed in the court below, was indeed fatal to its cause.  Thus in the case of Manila Surety & Fidelity
Co., Inc. v. Batu Cons­truction Co., et al.,
L-16636, June 24, 1965, where appellants also failed to give notice of the time
and place of hearing of their motion for reconsideration in the trial court and
were practically in the very same position that herein appellee
is now situated, this Court, speaking thru Justice Makalintal,
resolved the same points now
raised in this appeal as follows:

“Appellants maintain that the motion was in reality one for
new trial under Rule 37, section 1, paragraph (c), and that pursuant to section
2 of the same Rule, they specifically pointed out the findings of the court
which they honestly believed to be contrary to law, making express reference to
the pertinent documentary evidence and legal provisions.  The sug­gestion is that when the motion is
upon that ground, the court may act upon it even if the mo­vant has not set the same for hearing. 
The Rules, however, are quite clear on the matter.  Section 2 of Rule 37, regarding motion for new trial, requires that a written
notice thereof be served by the movant on the
ad­verse party, and this require­ment applies whichever of the grounds allowed
for such motion be relied upon.

“The written notice referred to evidently is that prescribed
for motions in general by Rule
15, Sections 4 and 5 (formerly Rule 26), which provide that such notice shall
state the time and place of hearing and shall be served upon all the parties
con­cerned at least three days in advance. 
And according to section 6 of the same Rule, no motion shall be acted
upon by the court without proof
of such notice.  In­deed it has been held
that in such a case, the motion is
nothing but a useless piece of paper (Philip­pine National Bank v. Donasco, L­18638, February 28, 1963, citing Manakil v. Revilla, 42 Phil. 81;
Roman Catholic Bishop of Lipa v. Municipality of Unisan, 44 Phil. 866; and Director of Lands v. Sanz, 45 Phil. 117). 
The reason is obvious: unless
the movant sets the time and place of hearing, the court would have no way
to determine whether that party agrees to or objects to the motion, and if he
objects, to hear him on his objection, since the Rules themselves do not fix any period within which he may
file his reply or opposition.

“We are not impressed by the argument that the ‘supplement’
filed by the appellants on May 30 should be deemed retroactive as of the date
the motion for re­consideration was filed and therefore cured the defect
therein.  To so consider it would be to
put a premium on negligence and subject the
finality of judgments to the forgetfulness or whims of parties?litigant
and their lawyers.  This of course would
be intolerable in a well-ordered judicial system.”

And in the same manner that the
“supplement” to the mo­tion for reconsideration in the above-cited
case failed to cure the defect of said motion for reconsideration, We also cannot
subscribe to the contention of herein appellee that
the failure to give notice of the time and place of hearing of its motion for
reconsideration was cured when it subsequently filed a motion to set it for
hearing.  The motion for reconsideration
that failed to give the requisite notice of hearing, did not toll the running
of the period for appeal, and the said reglementary
period naturally elapsed.  The decision
of September 30, 1964
therein sought to be reconsidered, had then become final when the subsequent
motion to set the same for hearing was filed on November 11, 1964. 
We have to declare,
therefore, that the order of December
1, 1964 complained of, amending the aforesaid final de­cision, is null
and void.

WHEREFORE, the said order of December 1, 1964, should be, as hereby set aside, and the decision of September 30, 1964 it amended, affirmed.  On equitable considerations, no costs.

Concepcion, C.J., Reyes, Dizon, Makalintal, Bengzon, Zaldivar, Sanchez,
Castro and Fernando, JJ.,
concur.

^[1]
Sec. 5, Rule 2, and Sec. 13, Rule 3, Rules of Court.

^[2]
Sec. 44(d), Republic Act 296, as amended; Interna­tional
Harvester Co. of the Phil. v.
Judge Aragon, 84 Phil. 363.

^[3]
Sec. 88, Republic
Act 296, as amended by Republic Act 2613; Delgado Bros. Inc. v. Home
Insurance Co. L-16567, March 27, 1961.

^[4]
Firemen’s Ins. Co. v. Manila Port Service, et al. L-22810, Aug. 31,
1967; The American Ins. Co. v. Macondray &
Co. Inc., et al., L-24031, Aug 19,1967;
Switzerland Gen. Ins. Co. Ltd. v. Java Pacific & Hoegh
Lines, et al., L-21760, April. 30, 1966;
Rizal Surety & Ins. Co. v. MRR,
L-20875, April 30, 1966.

^[5]
Conspecto v. Fruto,
31 Phil. 144; Santos v. Vera, 69 Phil. 712; Oriental Com. Co. Inc. v. Jereidini, 71 Phil. 25; Jarder
v. Jarder, et al., 90 Phil. 873.

^[6]
Cabrera, et al. v. Tiano, L-17299, July 31,
1963; See Peralta et al. v. Alipio, 97
Phil. 719, where We made the following observations:  “The statute of limitations contained in
the Code of Civil Procedure (Act 190) contains no specific or express provision
on the suspension or interruption of
the running of the period of
prescription by the institution of an action. 
There is a firmly established rule in many American states that the
commencement of the suit prior
to the expiration of the applicable limitation period interrupts the running of
the statute as to all parties to the action (43 Am. Jur., sec. 247, pp. 202- 203).  This rule is similar to
that contained in Art. 1155 of the New Civil Code.
This principle, however, does not
appear in Act No. 190, our old statute of limitations, x x x“; See
also II Reyes & Puno, An Outline of Phil. Civil Law (1967), pp. 257-258, where this comment appears: “Manresa
and Tribunal Supreme of Spain hold that the filing of the action interrupts the prescription
of actions regardless of the results of the action (TS 4 Jan. 1901; 17 Dec. 1927; 8 Nov. 1948).”

^[7]
Florendo v. Organo,
90 Phil. 483.

^[8]
Vda de Nato
v. Court of Industrial Relations, et al. L-16671, March 30, 1962.

^[9]
See Florendo v. Organo,
supra.

^[10]
See Vda. de Nator v.
CIR, et al. supra.

^[11]
Soriano v.
Ramirez, 44 Phil. 519; Ignacio v. Sison and Navarro, 56 Phil. 451.

^[12]
Moran, Rules of Court, Vol. II (1963
Ed.) p. 212.