Republic of the
Supreme Court
PHILIPPINE
BUSINESS BANK,
Petitioner, -
versus - FELIPE CHUA, Respondent. |
G.R. No. 178899
Present: CARPIO
MORALES, J., Chairperson, BRION, BERSAMIN, VILLARAMA, JR., and SERENO, JJ. Promulgated: November 15, 2010 |
x-----------------------------------------------------------------------------------------x
|
|
|
|
|
D E C I S I O N
|
|
BRION, J.:
We resolve the petition for review on
certiorari[1] filed by Philippine Business Bank (PBB)
challenging the decision of the Court of Appeals (CA) in CA-G.R. SP No. 94883 dated February 8, 2007,[2]
insofar as it overturned the Regional Trial Court’s (RTC’s) order dated December 16, 2005 declaring the finality of its Partial
Summary Judgment and granting the issuance of a writ of execution against
respondent Felipe Chua (respondent Chua).
PBB also seeks to overturn the resolution of the CA dated
FACTUAL ANTECEDENTS
From the records,
the following facts are not in dispute.
On March 22, 2002, Tomas Tan (Tan),
a stockholder and director/Treasurer of CST Enterprises, Inc. (CST), filed a derivative suit for the Declaration
of Unenforceability of Promissory Notes and Mortgage, Nullity of Secretary’s
Certificate, Injunction, Damages with Prayer for the Issuance of Temporary
Restraining Order/Writ of Preliminary Injunction against PBB, Francis Lee,
Alfredo Yao, Rodulfo Besinga, Stephen Taala, Rose Robles, Henry Ramos, Yu Heng,
Mabuhay Sugar Central, Inc., Nancy Chan, Henry Chan, John Dennis Chua, Jaime
Soriano, Voltaire Uychutin, Peter Salud, Edgar Lo, respondent Felipe Chua, and
John Does before the Makati City Regional Trial Court.[3]
In Tan’s
amended complaint dated
From his
investigation, Tan discovered that a certain
Atty. Jaime Soriano had issued a Secretary’s certificate, which stated that
John Dennis Chua was authorized during a duly constituted CST board meeting to open
a bank account and obtain credit facilities under the name of CST with PBB.
This Secretary’s Certificate also authorized John Dennis Chua to use CST’s
properties as security for these loans.[5]
Using this Secretary’s Certificate, John Dennis Chua took out loans with PBB in
the total amount of Ninety-One Million One Hundred Thousand Pesos (P91,100,000.00),[6]
and used CST properties as collateral.[7]
Respondent Chua signed as co-maker with
John Dennis Chua, who signed both as the representative of CST, as well as in
his personal capacity, on six promissory notes to PBB to evidence parts of this
loan.[8]
When PBB
threatened to foreclose the mortgage on these properties after CST defaulted,[9]
Tan filed the present complaint, essentially arguing that the loans/promissory
notes and mortgage made out in CST’s name are unenforceable against it, since
they were entered into by persons who were unauthorized to bind the company.[10]
In its
Amended Answer,[11]
PBB claimed that the loans to CST, as well as the corresponding mortgage over
CST properties, were all valid and binding since the loan applications and
documents accomplished by John Dennis Chua were supported by the duly
accomplished secretary’s certificate, which authorized him to obtain credit
facilities in behalf of CST. In addition, the original copies of the titles to
the properties were offered to PBB as collaterals.
PBB’s Amended
Answer also included a cross-claim against respondent Chua, demanding payment
of the promissory notes he signed as co-maker with John Dennis Chua.[12]
In respondent
Chua’s Answer to the Cross-Claim of PBB,[13]
he claimed that he never applied for a loan with the PBB. He further denied
authorizing John Dennis Chua to apply for any loans in CST’s name, or to use
CST properties as security for any loans.[14]
Nevertheless, he admitted that he signed,
as co-maker, six promissory notes covering the loans obtained by John Dennis Chua
with PBB. According to respondent Chua, he executed these promissory notes
after the loans had already been consummated, “in a sincere effort to persuade
John Dennis Chua to pay off the unauthorized loan and retrieve from
cross-claimant PBB the CST titles.”[15]
PBB subsequently
filed a Motion for Partial Summary Judgment based on Section 1, Rule 35 of the 1997
Rules of Civil Procedure (Rules),
claiming that since respondent Chua already admitted the execution of the promissory
notes in favor of PBB amounting to Seventy Five Million Pesos (P75,000,000.00),[16]
insofar as its cross-claim against him was concerned, there was no genuine
issue on any material fact on the issue of his liability to PBB. PBB argued
that although respondent Chua claimed that he signed the promissory notes merely
to persuade John Dennis Chua to pay off his loan to PBB, he was still liable as
an accommodation party under Section 29 of the Negotiable Instruments Law.[17]
THE RTC’S PARTIAL SUMMARY JUDGMENT
Acting on
PBB’s motion, the RTC issued a partial summary judgment on PBB’s cross-claim on
P75,000,000.00). The RTC reasoned that by
signing as a co-maker, he obligated himself to pay the amount indicated in the promissory
notes, even if he received no consideration in return. Thus, the RTC ordered him
to pay PBB the amount of P75,000,000.00, plus interests and costs.[18]
In its order
dated
On
THE COURT OF APPEALS DECISION
Respondent Chua filed a petition for certiorari and mandamus with the CA to challenge:
(a) the December 16, 2005 order,
granting PBB’s motion to disallow his appeal; (b) the December 21, 2005 order, granting
PBB’s motion to appoint Renato Flora as special sheriff to implement the writ
of execution; and (c) the February 16, 2006 order denying his motion for
reconsideration and to suspend execution. In essence, respondent Chua alleged
that the RTC acted with grave abuse of discretion in disallowing his appeal of
the partial summary judgment, and in issuing a writ of execution. Significantly,
respondent Chua did not question the propriety of the partial summary judgment.
On
However,
the CA held that the RTC committed grave abuse of discretion when it issued the
writ of execution against respondent Chua. As found by the CA, the RTC
grievously erred when it held that the partial
judgment had become final and executory when respondent Chua failed to avail of
the proper remedy of certiorari within the 60 day reglementary period
under Rule 65. Since a partial summary judgment does not finally dispose of the
action, it is merely an interlocutory, not a final, order. Thus, it could not
attain finality.
The CA further noted that certiorari is an independent action and
not part of the appeal proceedings, and failure to file a certiorari
petition would not result in the
finality of the judgment or final order. The RTC, thus, committed grave abuse of
discretion amounting to lack of jurisdiction when it granted the issuance of a
writ of execution, and the corresponding writ of execution issued by the court a quo, as well as the subsequent implementing
proceedings, were void.
THE PETITION
PBB submits two issues for our
resolution:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED AN ERROR IN APPLYING JURISPRUDENCE NOT ON ALL FOURS [WITH] THE
FACTUAL BACKDROP OF THE CASE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
AN ERROR IN RECALLING AND SETTING ASIDE THE WRIT OF EXECUTION AND ALL THE
PROCEEDINGS TAKEN FOR ITS IMPLEMENTATION ON THE WRONG NOTION THAT THE PARTIAL
SUMMARY JUDGMENT HAS NOT BECOME FINAL AND EXECUTORY.
THE RULING
We
DENY the petition for being unmeritorious.
Nature
of Partial Summary Judgment
PBB’s motion for partial summary judgment against
respondent Chua was based on Section 1, Rule 35 of the Rules, which provides:
Section 1. Summary
Judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served, move with supporting
affidavits, depositions or admissions for a summary judgment in his favor upon
all or any part thereof.
A summary judgment, or accelerated
judgment, is a procedural technique to promptly dispose of cases where the
facts appear undisputed and certain from the pleadings, depositions, admissions
and affidavits on record, or for weeding out sham claims or defenses at an
early stage of the litigation to avoid the expense and loss of time involved in
a trial.[21] When the pleadings on file
show that there are no genuine issues of fact to be tried, the Rules allow a
party to obtain immediate relief by way of summary judgment, that is, when the
facts are not in dispute, the court is allowed to decide the case summarily by
applying the law to the material facts.[22]
The rendition by the court of
a summary judgment does not always result in the full adjudication of all the
issues raised in a case. For these instances, Section 4, Rule 35 of the Rules provides:
Section 4. Case not fully adjudicated on motion. –
If on motion under this Rule, judgment
is not rendered upon the whole case or
for all the reliefs sought and a trial is necessary, the court at the
hearing of the motion, by examining the pleadings and the evidence before it
and by interrogating counsel shall ascertain what material facts exist without
substantial controversy and what are actually and in good faith controverted.
It shall thereupon make an order specifying the facts that appear without
substantial controversy, including the extent to which the amount of
damages or other relief is not in controversy, and directing such further
proceedings in the action as are just. The
facts so specified shall be deemed established, and the trial shall be
conducted on the controverted facts accordingly.
This is what
is referred to as a partial summary judgment. A careful reading of this section
reveals that a partial summary judgment was never intended to be considered a “final
judgment,” as it does not “[put] an end
to an action at law by declaring that the plaintiff either has or has not
entitled himself to recover the remedy he sues for.”[23] The
Rules provide for a partial summary judgment as a means to simplify the trial process by allowing the court to focus the trial
only on the assailed facts, considering as established those facts which are
not in dispute.
After this sifting process,
the court is instructed to issue an order, the partial summary judgment, which
specifies the disputed facts that have to be settled in the course of trial. In
this way, the partial summary judgment is more akin to a record of pre-trial,[24] an
interlocutory order, rather than a final judgment.
The differences between a “final
judgment” and an “interlocutory order” are well-established. We said in Denso (Phils.) Inc. v. Intermediate Appellate Court[25] that:
[A] final judgment or order is one that finally disposes of a case, leaving nothing more to be done by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis of the evidence presented at the trial, declares categorically what the rights and obligations of the parties are and which party is in the right; or a judgment or order that dismisses an action on the ground, for instance, of res judicata or prescription. Once rendered, the task of the Court is ended, as far as deciding the controversy or determining the rights and liabilities of the litigants is concerned. Nothing more remains to be done by the Court except to await the parties' next move . . . and ultimately, of course, to cause the execution of the judgment once it becomes “final” or, to use the established and more distinctive term, “final and executory.”
x x x x
Conversely, an order that does not finally dispose of
the case, and does not end the Court's task of adjudicating the parties'
contentions and determining their rights and liabilities as regards each other,
but obviously indicates that other things remain to be done by the Court, is
“interlocutory”, e.g., an order denying a motion to dismiss under Rule
16 of the Rules x x
x Unlike a 'final judgment or order, which is appealable, as above
pointed out, an 'interlocutory order may not be questioned on appeal except
only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.[26]
Bearing in mind these differences, there
can be no doubt that the partial summary judgment
envisioned by the Rules is an interlocutory order that was never meant to be
treated separately from the main case. As we explained in Guevarra v. Court of Appeals:[27]
It will be
noted that the judgment in question is a “partial summary judgment.” It was
rendered only with respect to the private respondents’ first and second causes
of action alleged in their complaint. It was not intended to cover the other
prayers in the said complaint, nor the supplementary counterclaim filed by the
petitioners against the private respondents, nor the third-party complaint
filed by the petitioners against the Security Bank and Trust Company. A partial summary judgment “is not a final
or appealable judgment.” (Moran, Vol. 2, 1970 Edition, p. 189, citing
several cases.) “It is merely a
pre-trial adjudication that said issues in the case shall be deemed established
for the trial of the case.” (Francisco, Rules of Court, Vol. II, p. 429.)
x x x x
The partial summary judgment rendered by the trial
court being merely interlocutory and not ‘a final judgment’, it is puerile to
discuss whether the same became final and executory due to the alleged failure
to appeal said judgment within the supposed period of appeal. What the rules
contemplate is that the appeal from the
partial summary judgment shall be taken together with the judgment that may be
rendered in the entire case after a trial is conducted on the material facts on
which a substantial controversy exists. This is on the assumption that the
partial summary judgment was validly rendered, which, as shown above, is not
true in the case at bar.[28]
We
reiterated this ruling in the cases of Province
of Pangasinan v. Court of Appeals[29] and Government
Service Insurance System v. Philippine Village Hotel, Inc.[30]
Applicability of Guevarra
PBB asserts that our pronouncement in
the cases of Guevarra,
We do not agree with PBB’s submission.
In
the Guevarra case, the Court held
that the summary judgment rendered by the lower court was in truth a partial
summary judgment because it failed to resolve the other causes of action in the
complaint, as well as the counterclaim and the third party complaint raised by
the defendants.
Contrary to PBB’s assertions, the same could be said for the
case presently before us. The partial summary judgment in question resolved
only the cross-claim made by PBB against its co-defendant, respondent Chua,
based on the latter’s admission that he signed promissory notes as a co-maker
in favor of PBB. This is obvious from the dispositive portion of the partial
summary judgment, quoted below for convenient reference:
WHEREFORE, a partial summary judgment is hereby rendered on the cross-claim of cross-defendant Philippine Business Bank against cross-defendant Felipe Chua, ordering the latter to pay the former as follows:
1.
The amount of Ten Million (P10,000,000.00) Pesos, representing
the value of the Promissory Note dated
2.
The amount of Twelve Million (P12,000,000.00) Pesos, representing
the value of the Promissory Note dated
3.
The amount of Twenty Three Million (P23,000,000.00) Pesos, representing
the value of the Promissory Note dated
4.
The amount of Eight Million (P8,000,000.00) Pesos, representing
the value of the Promissory Note dated
5.
The amount of Seven Million (P7,000,000.00) Pesos, representing
the value of the Promissory Note dated
6.
The amount of Fifteen Million (P15,000,000.00) Pesos, representing
the value of the Promissory Note dated
7. Plus cost of suit.
SO ORDERED. [32]
Clearly, this partial summary judgment did not dispose of the case as the main issues
raised in plaintiff Tomas Tan’s complaint, i.e., the validity of the secretary’s certificate which authorized
John Dennis Chua to take out loans, and execute promissory notes and mortgages
for and on behalf of CST, as well as the validity of the resultant promissory
notes and mortgage executed for and on behalf of CST, remained unresolved.
Chua shares common interest with co-defendant-
debtors
Still, PBB insists that the partial
summary judgment is a final judgment as regards PBB’s cross-claim against
respondent Chua since respondent Chua’s liability will not be affected by the resolution
of the issues of the main case.
On its face, the promissory notes were
executed by John Dennis Chua in two capacities – as the alleged representative
of CST, and in his personal capacity. Thus, while there can be no question as
to respondent Chua’s liability to PBB (since he already admitted to executing these
promissory notes as a co-maker), still, the court a quo’s findings on: (a) whether John Dennis Chua was properly
authorized to sign these promissory notes on behalf of CST, and (b) whether
John Dennis Chua actually signed these promissory notes in his personal
capacity, would certainly have the effect of determining whether respondent
Chua has the right to go after CST and/or John Dennis Chua for reimbursement on
any payment he makes on these promissory notes, pursuant to Article 1217 of the
Civil Code, which states:
Article 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.
In other words, PBB has a common
cause of action against respondent Chua with his alleged co-debtors, John
Dennis Chua and CST, it would simply not be proper to treat respondent Chua separately
from his co-debtors.
Moreover, we cannot turn a blind eye
to the clear intention of the trial court in rendering a partial summary
judgment. Had the trial court truly intended to treat PBB’s cross-claim against
respondent Chua separately, it could easily have ordered a separate trial via Section 2, Rule 31 of the Rules, which
states:
Section
2. Separate trials. – The court, in furtherance of convenience or to avoid
prejudice, may order a separate trial of any claim, cross-claim, counterclaim,
or third-party complaint, or of any separate issue or of any number of claims,
cross-claims, counterclaims, third-party complaints or issues.
That the trial court did not do so
belies PBB’s contention.
It has also not escaped our attention
that PBB, in its Motion to Disallow
Appeal and to Issue Execution Against Cross-Defendant Felipe Chua,[33]
already admitted that the partial
summary judgment is not a judgment or final order that completely disposes of
the case. In its own words:
x x x x
3. However, the remedy availed of by [respondent Chua] is patently erroneous because under Rule 41 Section 1 of the Rules of Court, an appeal may be taken only from a judgment or final order that completely disposes the case;
4. The judgment rendered by [the RTC] dated
Thus, PBB cannot now be allowed to
deny the interlocutory nature of the partial summary judgment.
Certiorari not the proper remedy
PBB also maintains that the partial
summary judgment attained finality when respondent Chua failed to file a certiorari petition, citing the last
paragraph of Section 1, Rule 41 of the Rules as basis. We quote:
Section 1. Subject of appeal.
– An appeal maybe taken from a judgment or final order that completely disposes
of the case, or of a particular matter therein when declared by these Rules to
be appealable.
No appeal
may be taken from:
x x
x x
(g) A
judgment or final order for or against one or more of several parties or in
separate claims, counterclaims, cross-claims and third party complaints, while
the main case is pending, unless the court allows an appeal therefrom;
x x x x
In all the above instances where the judgment,
or final order is not appealable, the aggrieved party may file an appropriate
special civil action under Rule 65.
Contrary to
PBB’s contention, however, certiorari
was not the proper recourse for respondent Chua. The propriety of the summary
judgment may be corrected only on appeal or other direct review, not a petition
for certiorari,[35] since
it imputes error on the lower court’s judgment. It is well-settled that certiorari is not available to correct
errors of procedure or mistakes in the judge’s findings and conclusions of law
and fact.[36] As we
explained in Apostol v. Court of Appeals:[37]
As a legal recourse, the special civil action of certiorari is a limited form of review. The jurisdiction of this Court is narrow in scope; it is restricted to resolving errors of jurisdiction, not errors of judgment. Indeed, as long as the courts below act within their jurisdiction, alleged errors committed in the exercise of their discretion will amount to mere errors of judgment correctable by an appeal or a petition for review.[38]
In light of these findings, we affirm the CA’s ruling that the
partial summary judgment is an interlocutory order which could not become a final
and executory judgment, notwithstanding respondent Chua’s failure to file a certiorari petition to challenge the
judgment. Accordingly, the RTC grievously erred when it issued the writ of
execution against respondent Chua.
In view of this conclusion, we find it unnecessary to resolve
the issue raised by respondent Chua on the validity of the RTC’s appointment of
a special sheriff for the implementation of the execution writ.
Propriety of Summary Judgment Reserved for Appeal
As a final point, we note that respondent
Chua has raised with this Court the issue of the propriety of the partial
summary judgment issued by the RTC. Notably, respondent Chua never raised this
issue in his petition for certiorari before
the CA. It is well settled that no question will be entertained on appeal
unless it has been raised in the proceedings below.[39]
Basic considerations of due process impel the adoption of this rule.[40]
Furthermore, this issue would be better
resolved in the proper appeal, to be taken by the parties once the court a quo has completely resolved all the
issues involved in the present case in a final judgment. If we were to resolve
this issue now, we would be preempting the CA, which has primary jurisdiction
over this issue.
Lastly, taking jurisdiction over this
issue now would only result in multiple appeals from a single case which
concerns the same, or integrated, causes of action. As we said in
Another recognized reason of
the law in permitting appeal only from a final order or judgment, and not from
an interlocutory or incidental one, is to avoid multiplicity of appeals in a
single action, which must necessarily suspend the hearing and decision on the
merits of the case during the pendency of the appeal. If such appeal were
allowed, the trial on the merits of the case would necessarily be delayed for a
considerable length of time, and compel the adverse party to incur unnecessary
expenses, for one of the parties may interpose as many appeals as incidental
questions may be raised by him, and interlocutory orders rendered or issued by
the lower court.
WHEREFORE, premises considered, we DENY the petition for lack of merit and
AFFIRM the Decision of the Court of
Appeals in CA-G.R. SP No. 94883 dated
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE
CONCUR:
CONCHITA CARPIO MORALES
Associate Justice |
|
|
LUCAS P. BERSAMIN Associate Justice |
MARTIN S. VILLARAMA, JR. Associate Justice |
MARIA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONCHITA CARPIO MORALES
Associate Justice
Chairperson
CERTIFICATION
RENATO
C. CORONA
Chief Justice
[1] Under Rule 45 of the Rules of Court, rollo, pp. 12-33.
[2] Penned by Associate Justice Conrado M. Vasquez, Jr., with the concurrence of Associate Justice Mariano C. Del Castillo (now a Member of this Court), and Associate Justice Lucenito N. Tagle, id. at 40-53.
[3] Docketed as Civil Case No. 02-299.
[4] Rollo, pp. 62-65.
[5]
[6]
[7]
[8]
[9]
[10] Ibid.
[11]
[12]
[13]
[14]
[15]
[16] Summary of Promissory Notes
|
Date of Promissory
Notes |
Due Date |
Amount |
|
|
|
|
|
|
|
12,000,000.00 |
|
|
|
23,000,000.00 |
|
|
|
8,000,000.00 |
|
|
|
7,000,000.00 |
|
|
|
15,000,000.00 |
[17] Section 29. Liability of accommodation party. An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefore and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of taking the instrument, knew him to be only an accommodation party.
[18] Rollo, pp. 254-257.
[19]
[20]
[21]
Monterey Foods Corporation v. Eserjose,
G.R. No.
153126,
[22]
Bungcayao v.
[23] Black’s Law Dictionary, Fifth Edition, p. 756 (1979).
[24]
Defined in Section 7, Rule 18 of the Rules, which states:
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.
[25]
G.R. No. 75000,
[26] Id. at 286-287, citing Investments, Inc. v.
Court of Appeals, 147 SCRA 334 (1987); PLDT
Employees' Union v. PLDT Co. Free Tel. Workers' Union, 97 Phil. 424 (1955),
citing Moran, Comments on the Rules, 1952 ed., Vol. I, pp. 894-895, Nico v. Blanco, 81 Phil. 213 (1948) and Hodges v. Villanueva, 90 Phil. 255
(1951); Mejia v. Alimorong, 4 Phil.
572 (1905); Rios v. Ros, 79 Phil. 243
(1947); Kapisanan ng mga Manggagawa sa
MRR Co. v. Yard Crew
[27]
No. L-49017,
[28]
[29]
G.R. No. 104266,
[30]
G.R. No. 150922,
[31] Rollo, p. 368.
[32] Annex “K,” Petition; rollo, pp. 254-257.
[33]
[34]
[35] See
Heirs of Roxas v. Garcia, G.R. No.
146208,
[36] La Campana Development Corporation v. See,
G.R. No. 149195,
[37] G.R.
No. 141854,
[38]
[39] Besana v. Mayor, G.R. No. 153837,
[40] Genesis Transport Service, Inc. v. Unyon ng Malayang Manggagawa ng Genesis Transport, G.R. No. 182114, April 5, 2010, citing Pag-Asa Steel Works v. Court of Appeals, 486 SCRA 475 (2006).
[41] G.R. No.
173176,