Bañez v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Ayala Corporation issued a check for P33,226,685.69 payable to PAL Employees' Savings and Loan Association, Inc. (PESALA). The check, marked "FOR PAYEE'S ACCOUNT ONLY," was entrusted to Catalino Bañez, PESALA's President. However, Bañez, along with co-officers Romeo Busuego and Renato Lim, deposited the check into their personal joint account with Republic Planters Bank (RPB), Cubao Branch, which was not an authorized depositary for PESALA. Subsequently, Bañez, Busuego, and Lim withdrew the funds and failed to account for them to PESALA. 2. Procedural History: PESALA filed a criminal case for estafa against Bañez, Busuego, and Lim. Concurrently, PESALA initiated a civil case against RPB for the face value of the check and damages, alleging RPB allowed the deposit and encashment of a crossed check payable only to PESALA, violating banking laws. RPB subsequently filed a third-party complaint against Bañez, Busuego, Lim, and RPB's branch manager, asserting their sole responsibility for the loss due to misrepresentation. Later, PESALA and RPB (by then PNB-RB) entered into a compromise agreement where PNB-RB paid PESALA P20,226,685.00, and PESALA agreed to assist in prosecuting the third-party defendants. The trial court approved this compromise. Third-party defendants Lim, Bañez, and Busuego moved to dismiss the third-party complaint, arguing it could not survive the main complaint's termination by compromise and raising grounds of lis pendens, forum shopping, lack of jurisdiction, and cause of action. The trial court denied the dismissal motions, ruling the third-party complaint was independent and distinct from the main complaint. Bañez and Busuego then filed a special civil action for certiorari with the Court of Appeals, challenging the trial court's orders. 3. The Petition: Petitioners Catalino F. Bañez and Romeo P. Busuego filed a petition for certiorari with the Supreme Court, arguing that the Court of Appeals erred in dismissing their petition. They contended that the Court of Appeals should have accepted duplicate original copies of the questioned orders, as permitted by Supreme Court Revised Circular No. 1-88, instead of strictly requiring certified true copies as per the Court of Appeals' Revised Internal Rules. Furthermore, they argued that the compromise agreement between PESALA and RPB should have automatically led to the dismissal of the third-party complaint, as it was merely an incident of the main case and the trial court's jurisdiction over the main action had ceased.
Issue(s)
Whether the Court of Appeals erred in dismissing the special civil action for certiorari for failure of petitioners to attach certified true copies of the questioned orders, as opposed to duplicate originals. Whether the dismissal of the main complaint by virtue of a compromise agreement warrants the automatic dismissal of the third-party complaint filed in consequence thereof.
Ruling
The petition is DENIED. The Resolutions of the Court of Appeals dated 31 January and 22 February 1995 are AFFIRMED.
Ratio Decidendi
On the procedural issue of attaching certified true copies: The Court held that while the submission of a duplicate original of the questioned order might constitute substantial compliance in some instances, such liberal construction is not warranted in this case due to the lack of merit in petitioners' cause. The Revised Internal Rules of the Court of Appeals specifically require certified true copies for petitions for certiorari, and Revised Circular No. 1-88, which allows duplicate originals, pertains only to petitions filed with the Supreme Court. Petitioners' failure to comply with the clear mandate of the appellate court's rules, without a compelling reason of substantial justice, led to the dismissal of their petition. The Court reiterated that rules of procedure are not to be lightly set aside, and exceptions are made only when substantial justice demands it, which was not apparent here. On the issue of the third-party complaint's viability after compromise: The Court ruled that the third-party complaint is independent and separate from the main complaint and does not automatically abate upon the compromise of the main action. Petitioners' reliance on the ruling in Ruiz Jr. v. Court of Appeals, where a cross-claim was rendered non-viable due to the dismissal of the main action for lack of cause of action, was misplaced. In this case, the main action was terminated not due to a lack of basis, but because the defendant (PNB-RB) admitted liability through a compromise agreement to avoid protracted litigation. This admission of liability by PNB-RB preserved the basis for the third-party complaint, as it established a potential liability for which PNB-RB sought indemnity or contribution from the third-party defendants. The Court emphasized that the continuation of proceedings on the third-party complaint would provide an opportunity for the parties to litigate their respective claims and defenses, and petitioners' assertion of non-liability is a defense to be raised and proven during the trial.
Main Doctrine
A third-party complaint, being independent and separate from the main complaint, does not automatically abate upon the compromise of the main action, especially when the compromise involves an admission of liability by the defendant, thus preserving the basis for the third-party claim.