Republic v. Paredes
REITERATIONFacts
1. The Antecedents: The Republic of the Philippines initiated an action to recover P48,529.19 in unpaid taxes from Lucas P. Paredes, Aurora C. Paredes, and Globe Assurance Company, Inc. The action also sought the confiscation of Globe Bond No. 1226, which had been issued by the defendants to the Bureau of Internal Revenue. Lucas and Aurora Paredes had executed a bond for P53,529.13, with Globe Assurance Company, Inc. as surety, to cover their income tax obligations. Despite an initial payment of P5,000.00, the Paredes spouses failed to make further payments, leaving a balance of P48,529.13. Globe Assurance Company, Inc. had a cross-claim against the Paredes spouses, alleging they had agreed to indemnify the company for any damages incurred due to the bond. 2. Procedural History: The Republic filed its complaint, and the Paredes spouses were declared in default. Globe Assurance Company, Inc. filed an amended answer including a cross-claim against the Paredes spouses. Both the plaintiff's claim and the cross-claim proceeded with evidence presentation. The case between the plaintiff and Globe Assurance Company, Inc. was submitted on a question of law. The trial court rendered a decision in favor of the Republic, ordering the Paredes spouses to pay the outstanding taxes and, in case of default, ordering the confiscation of the bond. However, the decision failed to address Globe Assurance Company, Inc.'s cross-claim. Globe Assurance Company, Inc. filed a motion for reconsideration to have the cross-claim addressed, but this motion was denied as untimely. Globe Assurance Company, Inc. then filed a notice of appeal and an appeal bond, with the appeal being taken directly to the Supreme Court. 3. The Petition: Globe Assurance Company, Inc. appealed to the Supreme Court, assigning as the sole error the lower court's refusal to render judgment on its cross-claim. The appellant argued that the trial court erred in not passing upon the cross-claim, which was filed to avoid multiplicity of suits and was permitted by the court. While acknowledging the motion for reconsideration was filed out of time, the appellant contended that the trial court retained jurisdiction to amend its decision before the appeal was perfected and the record on appeal approved. The Supreme Court, in modifying the appealed decision, found that the trial court had erred in not adjudicating the cross-claim and, to save time and promote justice, rendered judgment on the cross-claim itself, ordering the Paredes spouses to indemnify Globe Assurance Company, Inc. for any amounts paid on the bond, plus interest and costs.
Issue(s)
Whether the trial court erred in refusing to render judgment on the appellant's cross-claim. Whether the Supreme Court, on appeal, can render judgment on the cross-claim despite the trial court's failure to do so.
Ruling
The Supreme Court modified the appealed decision by rendering judgment on the cross-claim. It ordered Lucas P. Paredes and Aurora C. Paredes to pay Globe Assurance Company, Inc. jointly and severally 15% of the judgment amount as indemnity for damages, plus 12% annual interest on said indemnity from the date the judgment becomes final. Furthermore, in the event Globe Assurance Company, Inc. pays the judgment debt to the Republic of the Philippines, Lucas P. Paredes and Aurora C. Paredes were ordered jointly and severally to reimburse the company for the amount paid, with costs in both instances.
Ratio Decidendi
On Whether the trial court erred in refusing to render judgment on the appellant's cross-claim: The Supreme Court held that the trial court erred in not passing upon and determining the cross-claim. The Court emphasized that the purpose of filing a cross-claim, as provided for in the Rules of Court, is to settle in a single proceeding all claims among the parties to avoid multiplicity of suits. The appellant had correctly filed its cross-claim to seek indemnity from its co-defendants for any damages it might sustain from the execution of the bond. The Court presumed that the trial court merely overlooked or forgot the cross-claim while concentrating on the main case. The evidence presented by the appellant on its cross-claim, consisting of the bond, the indemnity clause, and demand letters, was not controverted as the co-defendants were declared in default. On Whether the Supreme Court, on appeal, can render judgment on the cross-claim despite the trial court's failure to do so: The Supreme Court, acknowledging a division among its members regarding the trial court's power to correct its omission after the motion for reconsideration was filed out of time, unanimously agreed that the Supreme Court, by virtue of its appellate jurisdiction, could and should correct the error. Some members believed the trial court could still amend its decision before the record on appeal was approved and jurisdiction was lost. Others opined that the judgment became final after 30 days, rendering the trial court powerless. However, all agreed that since the notice of appeal, appeal bond, and record on appeal were filed within the reglementary period, the judgment was appealable. To save time and in the interest of justice, the Supreme Court decided to make the correction itself instead of remanding the case to the trial court, considering the case was already about four years old. The Court modified the appealed decision by rendering judgment on the cross-claim.
Main Doctrine
The Supreme Court reiterated that it possesses the authority to correct errors made by lower courts, including the failure to rule on a cross-claim. This correction can be made either by the trial court itself before losing jurisdiction over the case (i.e., before the appeal is perfected and records transmitted) or by the Supreme Court on appeal. The latter is done to avoid multiplicity of suits and to promote judicial economy, especially when the appeal has been properly perfected.