Davao City v. De Guzman
REITERATIONFacts
The Antecedents: Petitioner City of Davao (Davao City) was the registered owner of a parcel of land. Heirs of Engracia Tagalplace and Juan dela Cruz claimed the land was donated for a public market but was not used as such, and sought reconveyance through private respondent Benjamin C. De Guzman, then Mayor of Davao City. The Sangguniang Panlungsod authorized De Guzman to sign a deed of reconveyance. Subsequently, it was discovered that the property was sold, not donated, to Davao City, based on an annotation on TCT No. 1417. Further investigation revealed that TCT No. T-29856 was a portion of TCT No. 1417, which was acquired by the Municipality of Davao (now Davao City) through a deed of sale in 1936. TCT No. 1588, covering Lot 134-A-2-B-1, was issued in the name of the Municipality of Davao. This title was later cancelled and TCT No. 29856 was issued when the Municipality purchased the lot from Tagalplace and dela Cruz in 1971. Procedural History: Davao City filed a complaint to annul the reconveyance, impleading the Heirs and De Guzman. De Guzman filed a motion to dismiss, which was denied by RTC-Br. 17. De Guzman's petition for certiorari before the CA (G.R. No. 75168) was dismissed as an improper remedy and moot. Meanwhile, RTC-Br. 17 rendered a summary judgment voiding the reconveyance and restoring the land to Davao City, including De Guzman in the judgment. The Heirs and De Guzman appealed to the CA (CA G.R. CV No. 00108), which set aside the RTC decision and remanded the case for further proceedings, finding genuine issues that required evidence presentation. The Heirs and De Guzman moved for the inhibition of Judge Fuentes, which was granted. The case was re-raffled to RTC-Br. 11, then to RTC-Br. 14 presided by Judge Omelio. Judge Omelio ordered De Guzman dropped as a co-defendant, citing Section 11, Rule 3 of the Rules of Court, despite the absence of a motion from De Guzman. Davao City moved for Judge Omelio's inhibition, which was denied. Davao City elevated the matter to the CA via certiorari (CA C.R. SP No. 03951-MIN), assailing Judge Omelio's order for grave abuse of discretion. The CA dismissed Davao City's petition, upholding Judge Omelio's authority under Section 11, Rule 3. De Guzman filed a motion for partial reconsideration, praying for treble costs and attorney's fees. On August 5, 2011, the CA granted the motion, directing Davao City and its counsel to pay De Guzman ₱5,000.00 as treble costs. The CA denied Davao City's motion for reconsideration on December 6, 2011. The Petition: Davao City filed a petition for certiorari under Rule 65, seeking to nullify the CA's August 5, 2011 and December 6, 2011 Resolutions, arguing that the imposition of treble costs was improper and lacked factual and legal basis. Davao City contended that its petition before the CA was based on a firm belief that De Guzman was a real party-in-interest, especially since his motion to dismiss was initially denied by Judge Fuentes and upheld by the CA. It argued that it was not acting in bad faith or with dilatory intent, and that De Guzman's actions, or inactions, made him liable.
Issue(s)
Whether the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the August 5, 2011 and December 6, 2011 Resolutions, directing petitioner and its counsel to pay solidarily private respondent Benjamin C. De Guzman treble costs in the amount of Five Thousand Pesos (₱5,000.00), and whether the imposition of treble costs by the Court of Appeals was justified and properly based on the grounds provided in Section 8, Rule 65 of the Rules of Court. Whether Davao City had a valid cause to elevate the matter of De Guzman being dropped as a co-defendant to the CA.
Ruling
The Supreme Court granted the petition, reversed and set aside the assailed Resolutions of the Court of Appeals, and deleted the imposition of ₱5,000.00 as treble costs.
Ratio Decidendi
On the imposition of treble costs: The Court held that the imposition of treble costs under Section 8 of Rule 65 of the Rules of Court is not automatic but discretionary, indicated by the word "may." This discretion requires a sound basis, considering all pertinent circumstances, especially when a petition is dismissed as "patently without merit," "prosecuted manifestly for delay," or raises "too unsubstantial" questions. The CA's August 5, 2011 Resolution, which granted De Guzman's motion for partial reconsideration, failed to clearly lay out the foundation for considering Davao City's petition "patently without merit." The CA's reasoning that it was "mind boggling" for Davao City to continue impleading its former mayor since 2002 was insufficient justification for imposing treble costs. The Court noted that the case had a complex procedural history, including the CA's earlier dismissal of De Guzman's own petition and the subsequent remand of the main case for further proceedings, indicating that the issues were not unsubstantial. The Court contrasted the present case with previous rulings where treble costs were awarded, noting the CA "never justified" the imposition of treble costs, making the award improper and lacking basis. On the merit of Davao City's petition before the CA: The Court found that Davao City had a valid cause to elevate the matter of De Guzman being dropped as a co-defendant to the CA. This was because Judge Omelio ordered De Guzman dropped despite the absence of a motion to that effect, and this order was not made after a full-blown hearing on the merits. Davao City's firm and sincere belief that De Guzman had a hand in the reconveyance was bolstered by the fact that his initial motion to dismiss was denied by both the RTC and the CA. The CA had not previously ruled that De Guzman was wrongfully impleaded, but rather that his remedy was not certiorari. Therefore, the petition questioning the dropping of De Guzman as co-defendant could not be considered "patently without merit."
Main Doctrine
The imposition of treble costs under Section 8, Rule 65 of the Rules of Court is discretionary and not automatic, requiring a clear basis and sound judgment considering all pertinent circumstances, particularly when the petition is dismissed as patently without merit, prosecuted manifestly for delay, or raises unsubstantial questions.