Perez v. Pacmac Machinery
REITERATIONFacts
1. The Antecedents: Republic Shoe Manufacturing Co. purchased machineries and spare parts from PACMAC Machinery & Merchandising Co., Inc. between 1958 and 1959, with these transactions evidenced by contracts of Sale with Chattel Mortgage. A dispute arose, leading to a complaint filed by Republic Shoe seeking reformation of these contracts. PACMAC counterclaimed for the outstanding balance of the purchase price and damages. 2. Procedural History: The parties subsequently entered into a compromise agreement, approved by the Court of First Instance of Rizal on November 12, 1960. This agreement stipulated the return of certain machineries and the payment of a specific sum by Republic Shoe, with Damaso P. Perez personally binding himself to this obligation and pledging his bank shares. PACMAC later filed a motion for execution due to alleged non-compliance. The trial court, after referring the matter to a commissioner, ordered a writ of execution for P7,231.00. Republic Shoe's subsequent motions to set the execution for trial were denied. The trial court then amended the writ of execution to make it personally enforceable against Damaso P. Perez. Republic Shoe elevated the case to the Court of Appeals via a petition for certiorari, which was denied, affirming the trial court's decision. 3. The Petition: Petitioner Damaso P. Perez seeks review of the Court of Appeals' decision, arguing that the trial court's order approving the commissioner's report and issuing the writ of execution was invalid for failing to provide proper notice and opportunity for objection as required by the Rules of Court. He also contends that the motion for execution involved litigious matters necessitating a prior hearing, and that the amendment making the writ personally enforceable against him was improper as he was not a party to the original action. The petition further asserts that the execution order deprived him of his day in court.
Issue(s)
Whether the trial court gravely abused its discretion in approving the commissioner's report and ordering the issuance of a writ of execution without giving the petitioner an opportunity to be heard on his objections. Whether the trial court erred in amending the writ of execution to include Damaso P. Perez personally.
Ruling
The Supreme Court modified the judgment by setting aside the orders of the trial court dated October 4 and October 14, 1961, and remanding the case to the said court with instructions to hear the motion for execution after due notice to the parties. The Court affirmed the trial court's decision to hold Damaso P. Perez personally liable.
Ratio Decidendi
On the alleged grave abuse of discretion in approving the commissioner's report: The Court found that the trial court gravely abused its discretion in approving the commissioner's report and ordering the issuance of a writ of execution without affording petitioner an opportunity to be heard on his objections thereto. The Rules of Court require that parties be notified of the commissioner's report and be given ten (10) days to signify objections. Subsequently, the report should be set for hearing before the court renders judgment. In this case, the trial court approved the report and ordered execution prematurely, as the petitioner had not yet received a copy of the report when the order was issued, and subsequently filed a motion to set for trial within the prescribed period, which was denied. This failure to grant the parties an opportunity to object to the report constitutes a serious error in violation of substantial rights, as established in Gov't of the Phil. vs. Ossorio. The Court noted that while referring the matter to a commissioner is sanctioned, the subsequent procedural requirements of notice and hearing on the report must be followed. On the amendment of the writ of execution to include Damaso P. Perez personally: The Court held that the amendment was proper and not an infringement of due process. It was undisputed that Republic Shoe Manufacturing Co. was a sole proprietorship owned by Damaso P. Perez, making them one and the same entity in legal contemplation. Perez was the real plaintiff, and any judgment for or against the company would necessarily benefit or prejudice him. The Court cited Albert vs. University Publishing Co., Inc., stating that if the protective mantle of due process has been accorded to the real litigant, he may be held liable as a party. Furthermore, in paragraph 7 of the compromise agreement, Damaso Perez personally bound himself to pay the indebtedness and pledged his shares, making him directly liable under the terms of the agreement approved by the court.
Main Doctrine
The trial court gravely abused its discretion in approving a commissioner's report and ordering the issuance of a writ of execution without affording the parties, particularly the petitioner, an opportunity to be heard on their objections to the report, thereby violating their right to due process.