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REM 1 rule 1- 5

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  REM 1 Rule 1-5 A- Action commencement ( Section 3 and 5) Section 3.   Cases governed  .  —   These Rules shall govern the procedure to be observed in actions, civil or criminal and special proceedings. (a) A civil action  is one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong, (1a, R2) A civil action may either be ordinary or special. Both are governed by the rules for ordinary civil actions,  subject to the specific rules prescribed for a special civil action. (n) ( b) A criminal action is  one by which the State prosecutes a person for an act or omission punishable by law. (n) (c) A special proceeding  is a remedy by which a party seeks to establish a status, a right, or a particular fact. (2a, R2) Section 5.   Commencement of action  .  —   A civil action is commenced by the filing of the srcinal complaint in court . If an additional defendant is impleaded in a later pleading, the action is commenced with regard to him on the dated of the filing of such later pleading, irrespective of whether the motion for its admission, if necessary, is denied by the court. (6a) Case No.1 ALDAY VS. FGU INSURANCE 350 SCRA 113 Topics: Jurisdiction, docket fees, permissive counterclaim, compulsory counterclaim FACTS: Respondent FGU Insurance Corporation filed a complaint with the RTC of Makati alleging that petitioner Evangeline K. Alday owed it P114,650.76 , representing unliquidated cash advances,  unremitted costs of premiums and other charges incurred by petitioner in the course of her work as an insurance agent for respondent. Respondent also prayed for exemplary damages, attorneys fees, and costs of suit. Petitioner filed her answer and by way of counterclaim, asserted her right for the payment of P104,893.45, representing direct commissions, profit commissions and contingent bonuses earned from 1 July 1986 to 7 December 1986, and for accumulated premium reserves amounting to P500,000.00.In addition, petitioner prayed for attorneys fees, litigation expenses, moral damages and exemplary damages for the allegedly unfounded action filed by respondent. Respondent filed a Motion to Strike Out Answer With Compulsory Counterclaim And To Declare Defendant In Default because petitioners answer was allegedly filed out of time. However, the trial court denied the motion similarly rejected respondents motion for reconsideration. A few weeks later, respondent filed a motion to dismiss petitioners counterclaim, contending that the trial court never acquired jurisdiction over the same because of the non-payment of docket fees by petitioner. In response, petitioner asked the trial court to declare her counterclaim as exempt from payment of docket fees since it is compulsory and that respondent be declared in default for having failed to answer such counterclaim.  The trial court   granted respondent’s motion to dismiss petitioner’s counterclaim and consequently, denied petitioners motion. The court found petitioners counterclaim to be merely permissive in nature and held that petitioner’s failure to pay docket fees prevented the court from acquiring jurisdiction over the same . The trial court similarly denied petitioners motion for reconsideration.  The Court of Appeals sustained the trial court, finding that petitioners own admissions, as contained in her answer, show that her counterclaim is merely permissive. ISSUES : 1.   Is the counterclaim of petitioner permissive or compulsory?  2.   Is the counterclaim of petitioner exempt from the payment of docket fees and therefore the court acquired   jurisdiction over the same?  RULING:  1. The counterclaim of petitioner is PERMISSIVE. In Valencia v. Court of Appeals  , this Court capsulized the criteria or tests that may be used in determining whether a counterclaim is compulsory or permissive, summarized as follows: 1. Are the issues of fact and law raised by the claim and counterclaim largely the same?  2. Would res judicata bar a subsequent suit on defendants claim absent the compulsory counterclaim rule?  3. Will substantially the same evidence    support or refute plaintiff’s claim as well as defendants counterclaim? 4. Is there any logical relation between the claim and the counterclaim?  Another test, applied in the more recent case of Quintanilla v. Court of Appeals  , is the compelling test of compulsoriness which requires a logical relationship between the claim and counterclaim , that is, where conducting separate trials of the respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court.  Tested against the abovementioned standards, petitioners counterclaim for commissions, bonuses, and accumulated premium reserves is merely permissive. The evidence required to prove petitioners claims differs from that needed to establish respondent’s demands for the recovery of cash accountabilities from petitioner, such as cash advances and costs of premiums. The recover y of respondent’s claims is not contingent or dependent upon establishing petitioners counterclaim, such that conducting separate trials will not result in the substantial duplication of the time and effort of the court and the parties.  One would search the records in vain for a logical connection between the parties’ claims. This conclusion is further reinforced by petitioners own admissions since she declared in her answer that respondents cause of action, unlike her own, was not based upon the Special Agents Contract. However, petitioners claims for damages, allegedly suffered as a result of the filing by respondent of its complaint, are compulsory. 2. NO. The counterclaim being permissive, in order for the trial court to acquire jurisdiction over the same, petitioner is bound to pay the prescribed docket fees. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid . The court may allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period. Meanwhile, the compulsory counterclaim of petitioner for damages based on the filing by respondent of an allegedly unfounded and malicious suit need not be answered since it is inseparable from the claims of respondent. If respondent were to answer the compulsory counterclaim of petitioner, it would merely result in the former pleading the same FACTS raised in its complaint.  _____________________________________________________________ Case #2 KOREA TECHNOLOGIES CO., LTD. VS. , HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial Court of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING CORPORATION,   G.R. NO. 143581. JANUARY 7, 2008 TOPIC: Requirement of docket fees and certificate of non-forum shopping in respondent’s Answer with counterclaim. FACTS: Petitioner KOGIES and respondent PGSMC executed a Contract whereby KOGIES would set up an LPG Cylinder Manufacturing Plant for respondent.  Respondent unilaterally cancelled the contract on the ground that petitioner had altered the quantity and lowered the quality of the machineries and equipment it delivered. Petitioner opposed informing the latter that PGSMC could not unilaterally rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined violations by petitioner. Petitioner then filed a Complaint for Specific Performance against respondent before the RTC . Respondent filed its Answer with Compulsory Counterclaim asserting that it had the full right to dismantle and transfer the machineries and equipment because it had paid for them in full as stipulated in the contract. KOGIES filed a motion to dismiss respondent’s counterclaims arguing that when PGSMC filed the counterclaims, it should have paid docket fees and filed a certificate of non-forum shopping, and that its failure to do so was a fatal defect. The RTC dismissed the petitioner’s motion to dismiss respondent’s counterclaims as these counterclaims fell within the requisites of compulsory counterclaims. ISSUE/S: WON payment of docket fees and certificate of non-forum shopping were required in the respondent’s Answer with counterclaim? RULING: NO. The counterclaims of PGSMC were incorporated in its Answer with Compulsory Counterclaim in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or cross- claim states, “ A compulsory counterclaim or a cross-claim that a defending party has at the time he files his answer shall be contained therein .” As to the failure to submit a certificate of forum shopping, PGSMC’s Answer is not an initiatory pleading which requires a certification against forum shopping under Sec. 524 of Rule 7, 1997 Revised Rules of Civil Procedure . It is a responsive pleading, hence, the courts a quo did not commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s compulsory counterclaims. At the time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it was not liable to pay filing fees for said counterclaims being compulsory in nature. We stress, however, that effective AUGUST 16, 2004  under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or cross-claims.  _____________________________________________________________   Case #3- LEONIDES MERCADO, represented by his heirs: Racquel D. Mercado, Jimmy D. Mercado, Henry D. Mercado, Louricar D. Mercado and Virgilio D. Mercado,  petitioners, vs. COURT OF APPEALS and SAN  MIGUEL CORPORATION,  respondents. G.R. No. 169576, October 17, 2008   TOPIC: Jurisdiction, Compulsory and Permissive Counterclaim   FACTS: Leonides Mercado had been distributing respondent San Miguel Corporation’s (SMC’s) beer products in Quiapo, Manila since 1967. SMC extended to him a P7.5 million credit line allowing him to withdraw goods on credit. Mercado failed to pay for the items he withdrew on credit. To secure his purchases, Mercado assigned three China Banking Corporation (CBC) certificates of deposit amounting to ₱ 5 million to SMC and executed. Citing the continuing hold-out agreement (which allows SMC to encash China Banking Corporation (CBC) certificates of deposit assigned by Mercado), it asked CBC to release the proceeds of the assigned certificates of deposit. CBC approved SMB’s request and informed Mercado.  He also submitted three surety bonds from Eastern Assurance and Surety Corporation (EASCO) totaling ₱ 2.6 million Mercado filed an action to annul the continuing hold-out agreement and deed of assignment in the Regional Trial Court (RTC) of Manila. He claimed that the continuing hold-out agreement allowed forfeiture without the benefit of foreclosure. It was therefore void pursuant to Article 2088 of the Civil Code. SMC filed its answer with counterclaim against Mercado. SMC sought payment of the lees products he withdrew (or purchased on credit) worth P7,468,153.75. During trial, Mercado acknowledged the accuracy of SMC’s computation of his outstanding liability. SMC filed a third-party complaint against EASCO. Thus, the RTC dismissed the complaint and ordered Mercado and Eastern Assurance and Surety Corporation (EASCO) (to the extent of P2.6 million or the value of its bonds) to jointly and severally pay SMC the amount of P7,468,153.75. The CA affirmed the RTC decision in toto  . On October 28, 2005, EASCO filed a petition for review on certiorari in this Court 13  but eventually agreed to settle its liability with SMC. 14   The petition was terminated on September 19, 2007 Mercado passed away and was substituted by his heirs who filed the petition asserting that the CA erred in affirming the RTC decision in toto. The said decision (insofar as it ordered Mercado to pay SMC P7,468,153.75) was void. SMC’s counterclaim was permissive in nature. Inasmuch as SMC did not pay docket fees, the RTC never acquired jurisdiction over the counterclaim. ISSUE/S: Whether SMC’s counterclaim was permissive in nature, whereby payment of docket fees is necessary for the RTC to acquire jurisdiction. RULING: No. A counterclaim (or a claim which a defending party may have against any party) may be compulsory or permissive. A counterclaim that (1) arises out of (or is necessarily connected with) the transaction or occurrence that is the subject matter of the opposing party’s claim; (2) falls within the jurisdiction of the court and (3) does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, is compulsory. Otherwise, a counterclaim is merely permissive. When Mercado sought to annul the continuing hold-out agreement and deed of assignment (which he executed as security for his credit purchases), he in effect sought to be freed from them. While he admitted having outstanding obligations, he nevertheless asserted that those were not covered by the assailed accessory contracts. For its part, aside from invoking the validity of the said agreements, SMC therefore sought to collect the payment for the value of goods Mercado purchased on credit.  Thus, Mercado’s complaint and SMC’s counterclaim both touched the issues of wheth er the continuing hold-out agreement and deed of assignment were valid and whether Mercado had outstanding liabilities to SMC. The same evidence would essentially support or refute Mercado’s claim and SMC’s counterclaim. Based on the foregoing, had these issues been tried separately, the efforts of the RTC and the parties would have had to be duplicated . Clearly, SMC’s counterclaim, being logically related to Mercado’s claim, was compulsory in nature.  Consequently, the payment of docket fees was not necessary for the RTC to acquire jurisdiction over the subject matter.   Case # 4 PROTON PILIPINAS CORPORATION, AUTOMOTIVE PHILIPPINES, ASEA ONE CORPORATION and AUTOCORP,   Petitioners  , v.   BANQUE NATIONALE DE PARIS, 1   Respondent  . TOPIC: Commencement of Action. Payment of the correct docket fees. FACTS: Proton availed of the credit facilities of BNP.  To guarantee the payment of its obligation, its co-petitioners Automotive Corporation Philippines (Automotive), Asea One Corporation (Asea) and Autocorp Group (Autocorp) executed a corporate guarantee 2  to the extent of US$2,000,000.00. BNP and Proton subsequently entered into three trust receipt agreements. Under their trust agreement, Proton would receive imported motor vehicles and hold them in trust for BNP, to be applied to its obligations to it in case the vehicles are not sold, Proton would return them to BNP with the documents of title. Proton failed to deliver the proceeds and to return the unsold motor vehicles. Proton’s guarantors refused to pay its obligation so BNP filed a complaint ordering them to pay the initial amount of US$1,544,984.40 with accrued interest and other related charges (outstanding obligations).   RTC Makati Clerk of Court assessed the docket fees at P352,000. The petitioners filed a motion to dismiss the complaint by BNP for failure to pay the correct docket fees thus preventing the RTC from acquiring jurisdiction over the case. In addition, the petitioners allege the prematurity of the complaint since BNP did not priorly send a demand letter.  The RTC denied the motion to dismiss and the subsequent MR. The CA denied the appeal by way of certiorari stating that Section 7(a), Rule 141 of the Rules of Court excludes interest accruing from the principal amount being claimed in the pleading in the computation of the prescribed filing fees. CA denied their MR.  The petitioners argue that pursuant to Administrative Circular 11-94, interests claimed should be included in the computation of the docket fees.  Thus since BNP underpaid, RTC never acquired jurisdiction over the case. ISSUES: 1.) Should the computation for payment of docket fees have included the interest claimed by the complainant?  2.) Did the trial court fail to acquire jurisdiction over the case for insufficient docket fees?  RULING:  1. Yes. The clerk of court should thus have assessed the filing fee by taking into consideration the total sum claimed, inclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs, or the stated value of the property in litigation . In fine, the docket fees paid by respondent were insufficient. 2. No. When the complaint was filed in 1998, Rule 141 had been amended by Administrative Circular 11-94. In Manchester Development Corp. vs. CA, this Court held that the court acquires jurisdiction over any case only upon payment of the prescribed docket fees. However, that the ruling in Manchester was clarified in Sun Insurance Office, Ltd vs. Asuncion when this Court held that in the former there was an effort to defraud the government in avoiding to pay the correct docket fees, whereas in the latter the plaintiff demonstrated his willingness to abide by paying the additional fees as required.  The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertuldo Hinog v. Hon. Achilles Melicor  : Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment. Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government, the Manchester rule does not apply. Respondent merely relied on the assessment made by the Clerk of Court which turned out to be incorrect. Respondent prayed for “accrued interest subsequent to August 15, 1998 until finally fully paid.” The complaint having been filed on September 7, 1998, respondent’s claim includes the interest from August 16, 1998 until such date of filing. Respondent did not, however, pay the filing fee corresponding to its claim for interest from August 16, 1998 until the filing of the complaint on September 7, 1998. As priorly discussed, this is required under Rule 141, as amended by Administrative Circular 11-94, which was the rule applicable at the time. Thus, as the complaint currently stands, respondent cannot claim the interest from August 16, 1998 until September 7, 1998, unless respondent is allowed by motion to amend its complaint within a reasonable time and specify the precise amount of interest petitioners owe from August 16, 1998 to September 7, 1998 and pay the corresponding docket fee. Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim not alleged, or a relief different or more than that claimed in the pleading, the party concerned shall pay the additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fees. In Ayala Corporation v. Madayag  , 43  in interpreting the third rule laid down in Sun Insurance regarding awards of claims not specified in the pleading, this Court held that the same refers   only to damages arising after the filing of the complaint or similar pleading as to which the additional filing fee therefor shall constitute a lien on the judgment.  'The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading should be specified. While it is true that the determination of certain damages as exemplary or corrective damages is left to the sound discretion of the court, it is the duty of the parties claiming such damages to specify the amount sought on the basis of which the court may make a proper determination, and for the proper assessment of the appropriate docket fees. The exception contemplated as to claims not specified or to claims although specified are left for determination of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof . 44  (Emphasis and underscoring supplied; citation omitted) ςηαñ   WHEREFORE , the petition is GRANTED in part. The July 25, 2001 Decision and the December 18, 2001 Resolution of the Court Appeals are hereby MODIFIED. The Clerk of Court of the Regional Trial Court of Makati City is ordered to reassess and determine the docket fees that should be paid by respondent, BNP, in accordance with the Decision of this Court, and direct
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