Ng Meng Tam vs Chinabank

G.R. No. 214054, Aug. 5, 2015;

NG MENG TAM, Petitioner, vs. CHINA BANKING CORPORATION,Respondent.

This case stemmed from a collection suit filed by China Banking Corporation (China Bank) against Ever Electrical Manufacturing Company Inc. (Ever), the heirs of Go Tong, Vicente Go, George Go and petitioner Ng Meng Tam.

China Bank alleged that it granted Ever a loan. The loan was allegedly backed by two surety agreements executed by Vicente, George and petitioner in its favor. When Ever defaulted in its payment, China Bank sent demand letters collectively addressed to George, Vicente and petitioner. The demands were unanswered. China Bank filed the complaint for collection.

In his Answer, petitioner alleged that the surety agreements were null and void since these were executed before the loan was granted. Petitioner posited that the surety agreements were contracts of adhesion to be construed against the entity which drafted the same. Petitioner also alleged that he did not receive any demand letter.

Petitioner served interrogatories to parties pursuant to Sections 111 and 6,12 Rule 25 of the Rules of Court to China Bank and required Mr. George C. Yap, Account Officer of the Account Management Group, to answer.

George Yap executed his answers to interrogatories to parties.

Petitioner moved for the hearing of his affirmative defenses. Because he found Yap’s answers to the interrogatories to parties evasive and not responsive, petitioner applied for the issuance of a subpoena duces tecum and ad testificandum against George Yap pursuant to Section 6,14 Rule 25 of the Revised Rules of Court.

When the case was called for the presentation of George Yap as a witness, China Bank objected citing Section 5 of the JAR. China Bank said that Yap cannot be compelled to testify in court because petitioner did not obtain and present George Yap’s judicial affidavit. The RTC required the parties to submit their motions on the issue of whether the preparation of a judicial affidavit by George Yap as an adverse or hostile witness is an exception to the judicial affidavit rule.

Petitioner contended that Section 5 does not apply to Yap because it specifically excludes adverse party witnesses and hostile witnesses from its application. Petitioner insists that Yap needed to be called to the stand so that he may be qualified as a hostile witness pursuant to the Rules of Court. China Bank, on the other hand, stated that petitioner’s characterization of Yap’s answers to the interrogatories to parties as ambiguous and evasive is a declaration of what type of witness Yap is. It theorizes that the interrogatories to parties answered by Yap serve as the judicial affidavit and there is no need for Yap to be qualified as a hostile witness.

The RTC ruled that Section 5 did not apply to Yap since he was an adverse witness and he did not unjustifiably decline to execute a judicial affidavit.

The RTC stressed that Section 5 of the JAR required the requested witness’ refusal to be unjustifiable. It stated: the [JAR] requires that the refusal must be unjustifiable and without just cause. It must be pointed out that [China Bank]’s previous motions to quash the subpoena was grounded on the claim that having already submitted to this court his sworn written interrogatories, his being compelled to testify would be unreasonable, oppressive and pure harassment. Thus, witness’ refusal to testify cannot be considered unjustifiable since he raised valid grounds.

Issues:

1. Whether or not RTC committed an error of law when it interpreted sec. 5 of the JAR?

2. Whether or not RTC committed an error of law when it effectively disregarded the relevant rules on modes of discovery which govern the presentation of adverse witnesses.

Held:

1. Under Section 10,25 parties are to be penalized if they do not conform to the provisions of the JAR. Parties are however allowed to resort to the application of a subpoena pursuant to Rule 21 of the Rules of Court in Section 5 of the JAR in certain situations. Section 5 provides:

Sec. 5. Subpoena. – If the government employee or official, or there quested witness, who is neither the witness of the adverse party nor a hostile witness, unjustifiably declines to execute a judicial affidavit or refuses without just cause to make the relevant books, documents, or other things under his control available for copying, authentication, and eventual production in court, the requesting party may avail himself of the issuance of a subpoena ad testificandum or duces tecum under Rule 21 of the Rules of Court. The rules governing the issuance of a subpoena to the witness in this case shall be the same as when taking his deposition except that the taking of a judicial affidavit shal1 be understood to be ex parte.

While we agree with the RTC that Section 5 has no application to Yap as he was presented as a hostile witness we cannot agree that there is need for a finding that witness unjustifiably refused to execute a judicial affidavit. Section 5 of the JAR contemplates a situation where there is a (a) government employee or official or (b) requested witness who is not the (1) adverse party’s witness nor (2) a hostile witness. If this person either (a) unjustifiably declines to execute a judicial affidavit or (b) refuses without just cause to make the relevant documents available to the other party and its presentation to court, Section 5 allows the requesting party to avail of issuance of subpoena ad testificandum or duces tecum under Rule 21 of the Rules of Court. Thus, adverse party witnesses and hostile witnesses being excluded they are not covered by Section 5. Expressio unius est exclusionalterius: the express mention of one person, thing, or consequence implies the exclusion of all others.

Here, Yap is a requested witness who is the adverse party’s witness. Regardless of whether he unjustifiably declines to execute a judicial affidavit or refuses without just cause to present the documents, Section 5 cannot be made to apply to him for the reason that he is included in a group of individuals expressly exempt from the provision’s application.

2. The JAR being silent on this point, we turn to the provisions governing the rules on evidence covering hostile witnesses specially Section 12, Rule 132 of the Rules of Court which provides:

SEC. 12. Party may not impeach his own witness. – Except with respect to witnesses referred to in paragraphs (d) and (e) of Section 10, the party producing a witness is not allowed to impeach his credibility.

A witness may be considered as unwilling or hostile only if so declared by the court upon adequate showing of his adverse interest, unjustified reluctance to testify, or his having misled the party into calling him to the witness stand.

The unwilling or hostile witness so declared, or the witness who is an adverse party, may be impeached by the party presenting him in all respects as if he had been called by the adverse party, except by evidence of his bad character. He may also be impeached and cross-examined by the adverse party, but such cross-examination must only be on the subject matter of his examination-in-chief.

Before a party may be qualified under Section 12, Rule 132 of the Rules of Court, the party presenting the adverse party witness must comply with Section 6, Rule 25 of the Rules of Court which provides:

SEC. 6. Effect of failure to serve written interrogatories. – Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a party not served with written interrogatories may not

be compelled by the adverse party to give testimony in open court, or to give a deposition pending appeal.

In Afulugencia v. Metropolitan Bank & Trust Co.,27 this Court stated that “in civil cases, the procedure of calling the adverse party to the witness stand is not allowed, unless written interrogatories are first served upon the latter.”

In this case, parties, with the approval of the Court, furnished and answered interrogatories to parties pursuant to Rule 25 of the Rules of Court. They therefore complied with Section 6 of Rule 25 of the Rules of Court. Before the present controversy arose, the RTC had already issued subpoenas for Yap to testify and produce documents. He was called to the witness stand when China Bank interposed its objection for non-compliance with Section 5 of the JAR. Having established that Yap, as an adverse party witness, is not within Section 5 of the JAR’s scope, the rules in presentation of adverse party witnesses as provided for under the Rules of Court shall apply. In keeping with this Court's decision in Afulugencia, there is no reason for the RTC not to proceed with the presentation of Yap as a witness.

In sum, Section 5 of the JAR expressly excludes from its application adverse party and hostile witnesses. For the presentation of these types of witnesses, the provisions on the Rules of Court under the Revised Rules of Evidence and all other correlative rules including the modes of deposition and discovery rules shall apply.

PHILHEALTH vs Our Lady of Lourdes Hospital

G.R. No. 193158, Nov. 11, 2015;

PHILIPPINE HEAL TH INSURANCE CORPORATION, Petitioner, versus OUR LADY OF LOURDES HOSPITAL, Respondent.

Petitioner Philippine Health Insurance Corporation (PHIC) is a government corporation created under Republic Act (R.A.) No. 7875, as amended, to administer and implement the country's National Health Insurance Program, while respondent Our Lady of Lourdes Hospital (OLLH) is an institutional health care provider duly accredited with the PHIC.

PHIC filed a Complaint with its Legal Sector - Prosecution Department against OLLH for the administrative offense of filing multiple claims, which is penalized under Section 145, Rule XXVIII of the Implementing Rules and Regulations (IRR) of R.A. No. 7875. Allegedly, OLLH filed two claims of the same amount of PhilHealth benefits involving the same patient for the same diagnosis and covering the same period of confinement.

OLLH moved to defer the submission of its position paper pending the answer of the PHIC President and CEO to the written interrogatories as well as the inspection and copying of the original transmittal letter and all other claims of the Complaint.  According to OLLH, these modes of discovery were availed of because its representatives were denied and/or not given access to documents and were not allowed to talk to PHIC personnel with regard to the charge.

Issues:

1.  Whether or not PHIC petition should be dismissed for non-compliance on Rules on certification against non-forum shopping?

2. Whether the CA erred in annulling and setting aside the order of PHIC Arbitration Department, which denies OLLH’s resort to modes of discovery?

Held:

1. According to OLLH, PHIC Board Resolution No. 695, S. 2004, does not indicate that Alex B.  Cañaveral, who is the Officer-in-Charge of the Office of the Senior Vice-President (SVP) for Legal Services Sector (LSS) of PHIC, is duly authorized to sign the verification and certification against forum shopping at the time of the filing of the petition on September 20, 2010. Having been signed without proper authorization from the PHIC Board of Directors, the certification is defective and, therefore, constitutes a valid cause for the dismissal of the petition.

Resolution No. 694 designates, among others, the Vice-President for Legal Services Group “to sign on all verifications and certificates of non-forum shopping of all cases involving the Corporation, whether to be filed in court, administrative agency or quasi-judicial body,” while Resolution No. 1105 states that the SVP for LSS is one of those officers authorized “to represent the Corporation in any and all legal proceedings before any judicial and/or quasi-judicial bodies that may involve the Corporation, including the signing of initiatory and/or responsive pleadings including all the necessary and/or incidental legal documents relative to the legal proceedings.”

There is substantial compliance on the part of PHIC aside from the submission, albeit belatedly, of Resolution Nos. 694 and 1105, Cañaveral, by virtue of his office, is definitely in a position to verify the truthfulness and correctness of the allegations in the petition.

2. Through written interrogatories, a party may elicit from the adverse party or parties any facts or matter that are not privileged and are material and relevant to the subject of the pending action. Like other modes of discovery authorized by the Rules, the purpose of written interrogatories is to assist the parties in clarifying the issues and in ascertaining the facts involved in a case. On the other hand, the provision on production and inspection of documents is to enable not only the parties but also the court (in this case, the PHIC Arbitration Department) to discover all the relevant and material facts in connection with the case pending before it. It must be shown, therefore, that the documents sought to be produced, inspected and/or copied/photographed are material or contain evidence relevant to an issue involved in the action.

In this case, the questions contained in the written interrogatories filed and received on July 28, 2009 sought to elicit facts that could already be seen from the allegations as well as attachments of the Complaint and the Verified Answer. Specifically, the entries in the three (3) Validation Report that OLLH sought to be identified and/or explained by PHIC are either immaterial or irrelevant (to the issue of whether OLLH is guilty of filing multiple claims and OLLH’s defense that it inadvertently attached a second copy of the subject PhilHealth Claim Form 2 to the Transmittal Letter filed on June 19, 2007) or, even if material or relevant, are self-explanatory and need no further elaboration from PHIC. Thus, the interrogatories were frivolous and need not be answered. Aside from this, the PHIC Arbitration Department correctly observed that the written interrogatories were mistakenly addressed to the President and CEO of PHIC, who could not competently answer, either based on his job description or first-hand experience, issues that arose from and related to the filing and processing of claims.

By OLLH in its written interrogatories and motion for production/inspection may be addressed in a hearing to be held after submission of the position paper of the parties. If the Arbiter deemed it necessary, based on the required pleadings already submitted, a formal hearing may be conducted wherein witnesses who testify may be subjected to clarificatory questions. In such hearing, the Arbiter has the power to issue subpoena ad testificandum and duces tecum; he may issue subpoenas requiring attendance and testimony of witnesses or the production of documents and other material/s necessary. In effect, these serve the same purposes of the modes of discovery.

The foregoing considered, Arbiter De Leon did not commit grave abuse of discretion in denying OLLH's plea for written interrogatories and production/inspection of documents. His resolutions were consistent with the summary nature of the administrative proceedings, expeditiously resolving the case from the perspectives of time dimension and efficiency dimension.

Phil-Air Conditioning Center vs RCJ Lines and Rolando Abadilla, Jr.

 G.R. No. 193821, November 23, 2015

Phil-Air Conditioning Center (Phil-Air) filed this petition for review on certiorari

On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air sold to respondent RCJ Lines four Carrier Paris 240 air conditioning units for buses (units). The units included compressors, condensers, evaporators, switches, wiring, circuit boards, brackets, and fittings.

Phil-Air allegedly performed regular maintenance checks on the units pursuant to the one-year warranty on parts and labor. RCJ Lines issued three post-dated checks in favor of Phil-Air to partly cover the unpaid balance.

All the post-dated checks were dishonored when Phil-Air subsequently presented them for payment. Check No. 479759 was returned because it was drawn against insufficient funds, while Check Nos. 479760 and 479761 were returned because payments were stopped.

Before presenting the third check for payment, Phil-Air sent a demand letter to Rolando Abadilla, Sr. asking him to fund the post-dated checks. In view of the failure of RCJ Lines to pay the balance despite demand, Phil-Air filed on April 1, 1998 the complaint  for sum of money with prayer for the issuance of a writ of preliminary attachment.

In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased the units in the total amount of P1,240,000.00 and that it had only paid P400,000.00. It refused to pay the balance because Phil-Air allegedly breached its warranty.

RCJ Lines averred that the units did not sufficiently cool the buses despite repeated repairs. Phil-Air purportedly represented that the units were in accord with RCJ Lines’ cooling requirements as shown in Phil-Air’s price quotation. The price quotation provided that full payment should be made upon the units’ complete installation. Complete installation, according to RCJ Lines, is equivalent to being in operational condition.

RCJ Lines claimed that it was also entitled to be reimbursed for costs and damages occasioned by the enforcement of the writ of attachment.

Issues:

(1) Whether the claim of Phil-Air was barred by laches;

(2) Whether Phil-Air should reimburse RCJ Lines for the counterbond premium and its alleged unrealized profits;

(3) Whether RCJ Lines proved its alleged unrealized profits arising from the enforcement of the preliminary writ of attachment.

Held:

1. Phil-Air’s claim is not barred by laches. In general, there is no room to apply the concept of laches when the law provides the period within which to enforce a claim or file an action in court. Phil-Air’s complaint for sum of money is based on a written contract of sale. The ten-year prescriptive period under Article 1144 of the Civil Code thus applies.

In the present case, both parties admit the existence and validity of the contract of sale. They recognize that the price quotation dated August 4, 1989, contained the terms and conditions of the sale contract. They also agree that the price and description of the units were indicated on the sales invoice.

Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to do that which by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.

While the CA correctly held that prescription and estoppel by laches are two different concepts, it failed to appreciate the marked distinctions between the two concepts.

The court resolves whether the claimant asserted its claim within a reasonable time and whether its failure to do so warrants the presumption that it either has abandoned it or declined to assert it. The court determines the claimant’s intent to assert its claim based on its past actions or lack of action. After all, what is invoked in instances where a party raises laches as a defense is the equity jurisdiction of the court.

On the other hand, if the law gives the period within which to enforce a claim or file an action in court, the court confirms whether the claim is asserted or the action is filed in court within the prescriptive period. The court determines the claimant’s intent to assert its claim by simply measuring the time elapsed from the proper reckoning point (e.g., the date of the written contract) to the filing of the action or assertion of the claim.

In sum, where the law provides the period within which to assert a claim or file an action in court, the assertion of the claim or the filing of the action in court at any time within the prescriptive period is generally deemed reasonable, and thus, does not call for the application of laches. As we held in one case, unless reasons of inequitable proportions are adduced, any imputed delay within the prescriptive period is not delay in law that would bar relief.

Not all the elements of laches are present. To repeat, Phil-Air filed the complaint with the RTC on April 1, 1998. The time elapsed from August 4, 1989 (the date of the price quotation, which is the earliest possible reckoning point), is eight years and eight months, well within the ten-year prescriptive period. There was simply no delay (second element of laches) where Phil-Air can be said to have negligently slept on its rights. there is no basis for laches as the facts of the present case do not give rise to an inequitable situation that calls for the application of equity and the principle of laches.

2. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines’ alleged unrealized profits.

A writ of preliminary attachment is a provisional remedy issued by the court where an action is pending to be levied upon the property or properties of the defendant. The property is held by the sheriff as security for the satisfaction of whatever judgment that might be secured by the attaching party against the defendant.

The grant of the writ is conditioned not only on the finding of the court that there exists a valid ground for its issuance. The Rules also require the applicant to post a bond.

Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides that “the party applying for the order must…give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs that may be adjudged to the adverse party and all damages that he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.”

The enforcement of the writ notwithstanding, the party whose property is attached is afforded relief to have the attachment lifted. There are various modes of discharging an attachment under Rule 57, viz.:

(1) by depositing cash or posting a counter-bond under Section 12;

(2) by proving that the attachment bond was improperly or irregularly issued or enforced, or that the bond is insufficient under Section 13;

 (3) by showing that the attachment is excessive under Section 13; and (4) by claiming that the property is exempt from execution under Section 2.

RCJ Lines availed of the first mode by posting a counter-bond.

Under the first mode, the court will order the discharge of the attachment after (1) the movant makes a cash deposit or posts a counterbond and (2) the court hears the motion to discharge the attachment with due notice to the adverse party.

The amount of the cash deposit or counter-bond must be equal to that fixed by the court in the order of attachment, exclusive of costs. The cash deposit or counter-bond shall secure the payment of any judgment that the attaching party may recover in the action.

The discharge under Section 12 takes effect upon posting of a counter-bond or depositing cash, and after hearing to determine the sufficiency of the cash deposit or counter-bond. On the other hand, the discharge under Section 13 takes effect only upon showing that the plaintiff’s attachment bond was improperly or irregularly issued, or that the bond is insufficient. The discharge of the attachment under Section 13 must be made only after hearing.

As discussed above, it is patent that under the Rules, the attachment bond answers for all damages incurred by the party against whom the attachment was issued. Thus, Phil-Air cannot be held directly liable for the costs adjudged to and the damages sustained by RCJ Lines because of the attachment. Section 4 of Rule 57 positively lays down the rule that the attachment bond will pay “all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.”

The RTC, instead of declaring Phil-Air liable for the alleged unrealized profits and counter-bond premium, should have ordered the execution of the judgment award on the attachment bond. To impose direct liability to Phil-Air would defeat the purpose of the attachment bond, which was not dissolved despite the lifting of the writ of preliminary attachment.

The order to refund the counter-bond premium is likewise erroneous. The premium payment may be deemed a cost incurred by RCJ Lines to lift the attachment. Such cost may be charged against the attachment bond.

3. RCJ Lines failed to prove its alleged unrealized profits.

In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual damages covers unrealized profits, the amount of unrealized profits must be established and supported by independent evidence of the mean income of the business undertaking interrupted by the illegal seizure.

We explained in Spouses Yu that to merit an award of actual damages arising from a wrongful attachment, the attachment defendant must prove, with the best evidence obtainable, the fact of loss or injury suffered and the amount thereof. Such loss or injury must be of the kind which is not only capable of proof but must actually be proved with a reasonable degree of certainty. As to its amount, the same must be measurable based on specific facts, and not on guesswork or speculation.

Similarly, the evidence adduced by RCJ Lines to show actual damages fell short of the required proof. Its average daily income cannot be derived from the summary of daily cash collections from only two separate occasions, i.e., August 22-23 and September 2-3, 2000. The data submitted is too meager and insignificant to conclude that the buses were indeed earning an average daily income of P12,000.00.

More significant, the person who prepared the unsigned summary of daily cash collections was not presented before the RTC to verify and explain how she arrived at the computation. The dispatchers who prepared the collection reports were likewise not presented; some of the reports were also unsigned. While the summary was approved by Rolando Abadilla, Jr., in his testimony on the alleged unrealized profits was uncorroborated and self-serving.

Nonetheless, we recognize that RCJ Lines suffered some form of pecuniary loss when two of its buses were wrongfully seized, although the amount cannot be determined with certainty.

We note that in its prayer for the issuance of the writ of preliminary attachment, Phil-Air alleged that RCJ Lines was guilty of fraud in entering into the sale transaction. A perusal of the record, however, would show that Phil-Air failed to prove this bare assertion. This justifies an award of temperate or moderate damages in the amount of Php 50,000.00.

Dr. Emmanuel Vera vs Ernesto Rigor and the Court of Appeals

Aug. 10, 2007

Ernesto Rigor, respondent, filed with the Regional Trial Court (RTC) a complaint for sum of money with damages against Dr. Emmanuel Vera, petitioner. Respondent alleged in his complaint that petitioner purchased from him a brand new Ultrasound Scanner, Model HS 120, for P410,000.00. Petitioner paid P120,000.00 as downpayment, leaving a balance of P290,000.00. Despite respondents demand, petitioner failed to pay the same.

In his answer, petitioner claimed that he received the machine on a trial basis. However, when tested, its performance was unsatisfactory. Moreover, the hospital where the machine was to be installed has no funds. Respondent offered a new brand of Ultrasound Scanner but it turned out to be an old model.

During the pre-trial conference, the parties failed to reach an amicable settlement; hence, the trial court terminated the pre-trial and set the case for initial hearing. However, upon motion of respondents counsel, the trial was reset. During the hearing the trial court upon manifestation of petitioners counsel, realized that respondent failed to file a pre-trial brief. Petitioner filed a motion to dismiss the complaint raising as ground respondents failure to file a pre-trial brief.

Issue: whether the complaint is dismissible for respondents’ failure to file a pre-trial brief?

Held:

We hold that the issue rose before the Court of Appeals is both legal and factual as shown by the following discussion.

Section 6, Rule 18 of the 1997 Rules of Civil Procedure, as amended, provides:

SEC. 6. Pre-trial Brief. The parties shall file with the court and serve on the adverse party, in such manner as shall ensure their receipt thereof at least three (3) days before the date of the pre-trial, their respective pre-trial briefs which shall contain, among others:

(a) A statement of their willingness to enter into amicable settlement or alternative modes of dispute resolution, indicating the desired terms thereof;

(b) A summary of admitted facts and proposed stipulation of facts;

(c) The issues to be tried or resolved;

(d) The documents or exhibits to be presented, stating the purpose thereof;

(e) A manifestation of their having availed or their intention to avail themselves of discovery procedures or referral to commissioners; and

(f) The number and names of the witnesses, and the substance of their respective testimonies.

Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.

 Section 5 of the same Rule states:

SEC. 5. Effect of Failure to Appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. x x x

Section 7 likewise provides:

SEC. 7. Record of pre-trial. The proceedings in the pre-trial shall be recorded. Upon the termination thereof, the court shall issue an order which shall recite in detail the matters taken up in the conference, the action taken thereon, the amendments allowed to the pleadings, and the agreements or admissions made by the parties as to any of the matters considered. Should the action proceed to trial, the order shall explicitly define and limit the issues to be tried. The contents of the order shall control the subsequent course of the action, unless modified before trial to prevent manifest injustice. 

 Clearly, the above Rule mandatorily requires the parties to seasonably file their briefs and failure to do so shall be cause for the dismissal of the action.

As mentioned earlier, respondent did not file a pre-trial brief in violation of the above Rule. But what surprised us is the fact that the trial court conducted the pre-trial conference on January 21, 1997 despite the lack of respondents’ pre-trial brief and thereafter terminated the same. It was only on July 17, 1997 during the initial hearing (after two postponements) that the trial judge came to know, after being apprised by petitioners counsel, that respondent did not file a pre-trial brief.

While the trial judge erroneously preceded with the trial conference, the fact remains that respondent did not file a pre-trial brief. Pursuant to Section 6, Rule 18 quoted above, such failure is a cause for dismissal of the action. We have to emphasize that pre-trial and its governing rules are not technicalities which the parties may ignore or trifle with.

  

Obviously, since respondent did not file a pre-trial brief, it follows that the trial judge failed to conduct the pre-trial conference in accordance with Rule 18. In fact, he did not issue the required pre-trial order stating the various matters which should have been included therein. Indeed, the trial judge showed his ignorance of the Rules, specifically Rule 18. And by failing to take appropriate steps to enable the parties reach an amicable settlement, the trial judge showed his gross inefficiency. 

In conclusion, we rule that the Court of Appeals did not commit grave abuse of discretion in taking cognizance of respondents appeal. However, it erred in reversing the RTC judgment dismissing respondents complaint for his failure to file a pre-trial brief.

limos vs spouses odones

G.R. No. 186979 August 11, 2010

SOCORRO LIMOS, ROSA DELOS REYES and SPOUSES ROLANDO DELOS REYES and EUGENE DELOS REYES  Petitioners,

 - versus -

  SPOUSES FRANCISCO P. ODONES and ARWENIA R. ODONES, Respondents.

Private respondents-spouses Francisco Odones and Arwenia Odones, filed a complaint for Annulment of Deed, Title and Damages against petitioners Socorro Limos, Rosa Delos Reyes and Spouses Rolando Delos Reyes and Eugene Delos Reyes before the Regional Trial Court (RTC).

The complaint alleged that spouses Odones are the owners of a 940- square meter parcel of land located at Pao 1^st, Camiling, Tarlac by virtue of an Extrajudicial Succession of Estate and Sale dated, January 29, 2004, executed by the surviving grandchildren and heirs of Donata Lardizabal in whom the original title to the land was registered. These heirs were Soledad Razalan Lagasca, Ceferina Razalan Cativo, Rogelio Lagasca Razalan and Dominador Razalan.

Respondents decided to register the document of conveyance; and when they did, they found out that the lands Original Certificate of Title (OCT) was cancelled on April 27, 2005 and replaced by Transfer Certificate of Title (TCT) No. 329427 in the name of herein petitioners.

Petitioners were able to secure TCT No. 329427 by virtue of a Deed of Absolute Sale allegedly executed by Donata Lardizabal and her husband Francisco Razalan on April 18, 1972. 

Respondents sought the cancellation of these new TCTs on the ground that the signatures of Donata Lardizabal and Francisco Razalan in the 1972 Deed of Absolute Sale were forgeries, because they died on June 30, 1926 and June 5, 1971, respectively.

In their answer, petitioners pleaded affirmative defenses, which also constitute grounds for dismissal of the complaint. These grounds were: (1) failure to state a cause of action inasmuch as the basis of respondents alleged title is void, since the Extrajudicial Succession of Estate and Sale was not published and it contained formal defects, the vendors are not the legal heirs of Donata Lardizabal, and respondents are not the real parties-in-interest to question the title of petitioners, because no transaction ever occurred between them; (2) non-joinder of the other heirs of Donata Lardizabal as indispensable parties; and (3) respondents claim is barred by laches.

In their Reply, respondents denied the foregoing affirmative defenses, and insisted that the Extrajudicial Succession of Estate and Sale was valid. They maintained their standing as owners of the subject parcel of land and the nullity of the 1972 Absolute Deed of Sale, upon which respondents anchor their purported title. petitioners served upon respondents a Request for Admission on different matters.

Respondents failed to respond to the Request for Admission, prompting petitioners to file a Motion to Set for Preliminary Hearing on the Special and Affirmative Defenses, arguing that respondents failure to respond or object to the Request for Admission amounted to an implied admission pursuant to Section 2 of Rule 26 of the Rules of Court. As such, a hearing on the affirmative defenses had become imperative because petitioners were no longer required to present evidence on the admitted facts.

Respondents filed a comment on the Motion, contending that the facts sought to be admitted by petitioners were not material and relevant to the issue of the case as required by Rule 26 of the Rules of Court. Respondents emphasized that the only attendant issue was whether the 1972 Deed of Absolute Sale upon which petitioners base their TCTs is valid.

RTC denied the Motion and held that item nos. 1 to 4 in the Request for Admission were earlier pleaded as affirmative defenses in petitioners Answer, to which respondents already replied on July 17, 2006. Hence, it would be redundant for respondents to make another denial. The trial court further observed that item nos. 5, 6, and 7 in the Request for Admission were already effectively denied by the Extrajudicial Succession of Estate and Sale appended to the complaint and by the Sinumpaang Salaysay of Amadeo Razalan attached to respondents Reply.Petitioners moved for reconsideration but the same was denied in an Order dated January 5, 2007.

CA dismissed the petition ruling that the affirmative defenses raised by petitioners were not indubitable, and could be best proven in a full-blown hearing.

Issue:

1. Whether or not CA committed mistake in its decision?

2. Whether or not the case should be dismissed?

Held:

1. Pertinent to the present controversy are the rules on modes of discovery set forth in Sections 1 and 2 of Rule 26 of the Rules of Court, viz:

Section 1. Request for admission. At any time after issues have been joined, a party may file and serve upon any other party a written request for the admission by the latter of the genuineness of any material and relevant document described in and exhibited with the request or of the truth of any material and relevant matter of fact set forth in the request. Copies of the documents shall be delivered with the request unless copies have already been furnished.

SEC. 2 Implied admission. Each of the matters of which an admission is requested shall be deemed admitted unless, within a period designated in the request, which shall be not less than fifteen (15) days after service thereof, or within such further time as the court may allow on motion, the party to whom the request is directed files and serves upon the party requesting the admission a sworn statement either denying specifically the matters for which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters.

Under these rules, a party who fails to respond to a Request for Admission shall be deemed to have impliedly admitted all the matters contained therein. It must be emphasized, however, that the application of the rules on modes of discovery rests upon the sound discretion of the court.

 As such, it is the duty of the courts to examine thoroughly the circumstances of each case and to determine the applicability of the modes of discovery, bearing always in mind the aim to attain an expeditious administration of justice.

The determination of the sanction to be imposed upon a party who fails to comply with the modes of discovery also rests on sound judicial discretion. Corollarily, this discretion carries with it the determination of whether or not to impose the sanctions attributable to such fault.

As correctly observed by the trial court, the matters set forth in petitioners Request for Admission were the same affirmative defenses pleaded in their Answer which respondents already traversed in their Reply. The said defenses were likewise sufficiently controverted in the complaint and its annexes. In effect, petitioners sought to compel respondents to deny once again the very matters they had already denied, a redundancy, which if abetted, will serve no purpose but to delay the proceedings and thus defeat the purpose of the rule on admission as a mode of discovery which is to expedite trial and relieve parties of the costs of proving facts which will not be disputed on trial and the truth of which can be ascertained by reasonable inquiry.

A request for admission is not intended to merely reproduce or reiterate the allegations of the requesting partys pleading but should set forth relevant evidentiary matters of fact described in the request, whose purpose is to establish said partys cause of action or defense. Unless it serves that purpose, it is pointless, useless, and a mere redundancy.

Verily then, if the trial court finds that the matters in a Request for Admission were already admitted or denied in previous pleadings by the requested party, the latter cannot be compelled to admit or deny them anew. In turn, the requesting party cannot reasonably expect a response to the request and thereafter, assume or even demand the application of the implied admission rule in Section 2, Rule 26.  

In this case, the redundant and unnecessarily vexatious nature of petitioners Request for Admission rendered it ineffectual, futile, and irrelevant so as to proscribe the operation of the implied admission rule in Section 2, Rule 26 of the Rules of Court. There being no implied admission attributable to respondents failure to respond, the argument that a preliminary hearing is imperative loses its point. 

2. In an action for annulment of title, the complaint must contain the following allegations: (1) that the contested land was privately owned by the plaintiff prior to the issuance of the assailed certificate of title to the defendant; and (2) that the defendant perpetuated a fraud or committed a mistake in obtaining a document of title over the parcel of land claimed by the plaintiff.

Such action goes into the issue of ownership of the land covered by a Torrens title, hence, the relief generally prayed for by the plaintiff is to be declared as the lands true owner. Thus, the real party-in-interest is the person claiming title or ownership adverse to that of the registered owner. The herein complaint alleged: (1) that respondents are the owners and occupants of a parcel of land located at Pao 1^st Camiling, Tarlac, covered by OCT No. 11560 in the name of Donata Lardizabal by virtue of an Extrajudicial Succession of Estate and Sale; and (2) that petitioners fraudulently caused the cancellation of OCT No. 11560 and the issuance of new TCTs in their names by presenting a Deed of Absolute Sale with the forged signatures of Donata Lardizabal and her husband, Francisco Razalan. 

The absence of any transaction between petitioners and respondents over the land is of no moment, as the thrust of the controversy is the respondents adverse claims of rightful title and ownership over the same property, which arose precisely because of the conflicting sources of their respective claims. 

As to the validity of the Extrajudicial Succession of Estate and Sale and the status of petitioners predecessors-in-interest as the only heirs of Donata Lardizabal, these issues go into the merits of the parties respective claims and defenses that can be best determined on the basis of preponderance of the evidence they will adduce in a full-blown trial. A preliminary hearing, the objective of which is for the court to determine whether or not the case should proceed to trial, will not sufficiently address such issues. 

Anent the alleged non-joinder of indispensable parties, it is settled that the non-joinder of indispensable parties is not a ground for the dismissal of an action. The remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the court on motion of the party or on its own initiative at any stage of the action and/or such times as are just. It is only when the plaintiff refuses to implead an indispensable party despite the order of the court, that the latter may dismiss the complaint. In this case, no such order was issued by the trial court.

Equally settled is the fact that laches is evidentiary in nature and it may not be established by mere allegations in the pleadings and cannot be resolved in a motion to dismiss.

Finally, we cannot subscribe to petitioners contention that the status of the heirs of Donata Lardizabal who sold the property to the respondents must first be established in a special proceeding. The pronouncements in Heirs of Yaptinchay v. Hon. Del Rosario and in Reyes v. Enriquez^] that the petitioners invoke do not find application in the present controversy. 

In both cases, this Court held that the declaration of heirship can be made only in a special proceeding and not in a civil action. It must be noted that in Yaptinchay and Enriquez, plaintiffs action for annulment of title was anchored on their alleged status as heirs of the original owner whereas in this case, the respondents claim is rooted on a sale transaction. Respondents herein are enforcing their rights as buyers in good faith and for value of the subject land and not as heirs of the original owner. Unlike in Yaptinchay and Enriquez, the filiation of herein respondents to the original owner is not determinative of their right to claim title to and ownership of the property.