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7/25/2019 ANTONIO LIM TANHU
1/34
ANTONIO LIM TANHU, DY OCHAY, ALFONSO LEONARDO NG SUA and CO
OYO, petitioners, vs.HON. JOSE R. RAMOLETE as Presiding Judge, ran!" III,
CFI, Ce#u and TAN PUT, respondents.
ARREDO, J. | G.R. N$. L%&''() * Augus+ (, -(/
This case all started when a complaint was filed by respondent Tan Put only againstthe spouses-petitioners Antonio Lim Tanhu and Dy Ochay.
ubse!uently, in an amended complaint, their son Lim Tec" #huan and the other
spouses-petitioners Alfonso Leonardo $g ua and #o Oyo and their son %ng #hong
Leonardo were included as defendants.
&n said amended complaint, respondent Tan alleged that'
(. he )is the widow of Tee *oon Lim Po #huan, who was a partner in thecommercial partnership, +lory #ommercial #ompany ... with Antonio Lim Tanhu
and Alfonso $g ua that )defendant Antonio Lim Tanhu, Alfonso Leonardo $g
ua, Lim Tec" #huan, and %ng #hong Leonardo,
. Lim Tanhu and others through fraud and machination, too" actual and active
management of the partnership and although Tee *oon Lim Po #huan was the
manager of +lory #ommercial #ompany, defendants managed to use the funds
of the partnership to purchase lands and buildings in the cities of #ebu,
Lapulapu, andaue, and the municipalities of Talisay and inglanilla, some ofwhich were hidden. (Some were discovered, see list of description in full text)
he prayed for' /(0 Accounting of real and personal properties, /0 Delivery after
accounting of (12 of the total value of all the properties which is appro3 4 million and /20
Payment of Attorneys fees and damagees
The amended complaint was opposed on the ground that it was a modification of a
cause of action but the court allowed the same as it merely amplifies materia
averments constituting the cause of action in the original complaint. It likewise include
necessary and indispensable defendants without whom no final determination can be
had in the action and in order that complete relief is to be accorded as between those
already parties.
&n a single answer with counterclaim, defendants claimed'
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(. Tan is not the widow of Tee *oon because, according to them, his legitimate wife
was Ang io" Tin still living and with whom he had four /50 legitimate children, a
twin born in (65, and two others born in (656 and (674, all presently residing in
*ong"ong
. Proper li!uidation had been regularly made of the business of the partnership
and Tee *oon used to receive his 8ust share until his death, as a result of whichthe partnership was dissolved and what corresponded to him were all given to his
wife and children.
2. %ven before the death of Tee *oon Lim Po #huan, the plaintiff was no longer his
common law wife and even though she was not entitled to anything left by Tee
*oon Lim Po #huan, yet, out of the "indness and generosity on the part of the
defendants, particularly Antonio Lain Tanhu, who, was inspiring to be mon" and
in fact he is now a mon", plaintiff was given a substantial amount evidenced by
the !uitclaim.
5. Defendants have ac!uired properties out of their own personal fund and certainly
not from the funds belonging to the partnership, 8ust as Tee *oon Lim Po #huan
had ac!uired properties out of his personal fund and which are now in the
possession of the widow and neither the defendants nor the partnership have
anything to do about said properties
On the date set for the pre-trial, both of the two defendants-spouses the Lim Tanhusand $g uas, did not appear, for which reason they were all )declared in D%9A:LT.
They sought to hive this order lifted thru a motion for reconsideration, but the effort
failed when the court denied it.
Thereafter, the trial started, but at the stage thereof where the first witness of the
plaintiff by the name of Antonio $u;e< who testified that he is her adopted son, was up
for re-cross-e3amination, said plaintiff une3pectedly filed the following simple and
unreasoned )OT&O$ TO D=OP D%9%$DA$T L& T%#> #*:A$ A$D %$+
#*O$+ L%O$A=DO) which the court granted without verifying the notices.
imultaneously, the following order was also issued #onsidering that defendants
Antonio Lim Tanhu and his spouse Dy Ochay as well as defendants Alfonso $g ua
and his spouse #o Oyo have been declared in default for failure to appear during the
pre-trial and as to the other defendants the complaint had already been ordered
dismissed as against them. Let the hearing of the plaintiffs evidence ex-parte be set
which did not ta"e place upon verbal motion of the plaintiff.
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:pon learning of these orders, defendant Lim Tec" #heng filed a motion for
reconsideration thereof, and %ng #hong Leonardo, filed also his own motion for
reconsideration and clarification of the same orders. These motions were denied
eanwhile, respondent court rendered the impugned decision. &t does not appear
when the parties were served copies of this decision.
ubse!uently, all the defendants, thru counsel, filed a motion to !uash the order.?ithout waiting however for the resolution thereof, Lim Tec" #huan and %ng #hong
Leonardo went to the #ourt of Appeals with a petition for certiorari see"ing the
annulment of the above-mentioned orders. #ourt of Appeals dismissed said petition,
holding that its filing was premature, considering that the motion to !uash the order
was still unresolved by the trial court.
The other defendants, petitioners herein, filed their notice of appeal, appeal bond and
motion for e3tension to file their record on appeal, which was granted.
@ut before the perfection of their appeal, petitioners filed the present petition with this
#ourt.
And with the evident intent to ma"e their procedural position clear, counsel for
defendants, filed with respondent court a manifestation stating that )when the non-
defaulted defendants %ng #hong Leonardo and Lim Tec" #huan filed their petition in
the #ourt of Appeals, they in effect abandoned their motion to !uash the order and that
similarly )when Antonio Lim Tanhu, Dy Ochay, Alfonso Leonardo $g ua and #o Oyo,filed their petition for certiorari and prohibition ... in the upreme #ourt, they li"ewise
abandoned their motion to !uash. This manifestation was acted upon by respondent
court together with plaintiffs motion for e3ecution pending appeal in its order of the
same date 9ebruary (5, (64 this wise' The motion to quash is ordered
ABANDONED. The resolution of the motion for execution pending appeal shall
be resoled after the petition for certiorari and prohibition shall hae been
resoled b! the "upreme #ourt.
CONTENTION OF PETITIONERS0 :pon these premises, i+ is +"e 1$si+i$n $21e+i+i$ners +"a+ res1$nden+ !$ur+ a!+ed i33ega334, in 5i$3a+i$n $2 +"e ru3es $r 6i+"
gra5e a#use $2 dis!re+i$n0
(. without previously ascertaining whether or not due notice thereof had been
served on the adverse parties, as, in fact, no such notice was timely served on
the non-defaulted defendants Lim Tec" #huan and %ng #hong Leonardo and no
notice at all was ever sent to the other defendants, herein petitioners, and more
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so, in actuall! ordering the dismissal of the caseand at the same time setting
the case for further hearing as against the defaulted defendants, herein
petitioners, actually hearing the same ex-parte and thereafter rendering the
decision granting respondent Tan even reliefs not prayed for in the complaint.
. there $as compulsor! counterclaim in the common ans$er of the
defendants the nature of $hich is such that it cannot be decided in anindependent actionand as to which the attention of respondent court was duly
called in the motions for reconsideration.
2. respondent court had no authorit! to diide the case before it b!
dismissing the same as against the non%defaulted defendants and
thereafter proceeding to hear it ex%parteand subse!uently rendering 8udgment
against the defaulted defendants, considering that in their view, under the said
provision of the rules, when a common cause of action is alleged against several
defendants, the default of any of them is a mere formality by which those
defaulted are not allowed to ta"e part in the proceedings, but otherwise, all the
defendants, defaulted and not defaulted, are supposed to have but a common
fate, win or lose.
&n other $ords' petitioners posit that in such a situation' there can onl! be one
common (udgment for or against all the defendant' the non%defaulted and the
defaulted. Thus, petitioners contend that the order of dismissal should be considered
also as the final 8udgment insofar as they are concerned, or, in the alternative, it shouldbe set aside together with all the proceedings and decision held and rendered
subse!uent thereto, and that the trial be resumed as of said date, with the defendants
Lim Tec" #huan and %ng #hong Leonardo being allowed to defend the case for all the
defendants.
PRI7ATE RESPONDENT8S CONTENTIONS0 )etitioners had been properl!
declared in default' the! hae no personalit! nor interest to question the
dismissal of the case as against their non%defaulted co%defendants and should
suffer the consequences of their o$n default.
ince petitioners have already made or at least started to ma"e their appeal, as they
are in fact entitled to appeal, this special civil action has no reason for being
Additionally, she invo"es thepoint of prematurit!upheld by the #ourt of Appeals in
regard to the above-mentioned petition therein of the non-defaulted defendants Lim
Tec" #huan and %ng #hong Leonardo. 9inally, she argues that in any event, the errors
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attributed to respondent court are errors of (udgment and ma! be reie$ed onl! in
an appeal.
ISSUE0
HELD0 Pe+i+i$ners s"$u3d #e gran+ed re3ie2, i2 $n34 +$ s+ress e91"a+i!a334 $n!e
9$re +"a+ +"e ru3es $2 1r$!edure 9a4 n$+ #e 9isused and a#used as ins+ru9en+s2$r +"e denia3 $2 su#s+an+ia3 :us+i!e.
A review of the record of this case immediately discloses that here is another
demonstrative instance of how some members of the bar, availing of their proficiency in
invo"ing the letter of the rules without regard to their real spirit and intent, succeed in
inducing courts to act contrary to the dictates of 8ustice and e!uity, and, in some
instances, to wittingly or unwittingly abet unfair advantage by ironically camouflaging
their actuations as earnest efforts to satisfy the public clamor for speedy disposition of
litigations.
?e cannot simply pass over the impression that the procedural maneuvers and tactics
revealed in the records of the case at bar were deliberately planned with the calculated
end in view of depriving petitioners and their co-defendants below of every opportunity
to properly defend themselves against a claim of more than substantial character,
considering the millions of pesos worth of properties involved as found by respondent
udge himself in the impugned decision, a claim that appears, in the light of the
allegations of the answer and the documents already brought to the attention of thecourt at the pre-trial, to be rather dubious . ?hat is most regrettable is that apparently
all of these alarming circumstances have escaped respondent 8udge.
&ndeed, a seeming disposition on the part of respondent court to lean more on the
contentions of private respondent may be discerned from the manner it resolved the
attempts of defendants Dy Ochay and Antonio Lim Tanhu to have the earlier order of
default against them lifted. $otwithstanding that Dy Ochays motion was over the 8urat
of the notary public before whom she too" her oath. &t is not even a verification. ?hat
the rule re!uires as interpreted by the upreme #ourt is that the motion must have tobe accompanied by an affidavit of merits that the defendant has a meritorious defense,
thereby ignoring the very simple legal point that the ruling of the upreme #ourt in !ng
"eng vs. #ustodio, ( #=A B(, relied upon by *is *onor, under which a separate
affidavit of merit is re!uired refers obviously to instances where the motion is not over
oath of the party concerned, considering that what the cited provision literally re!uires
is no more than a )motion under oath.) S+a+ed $+"er6ise, 6"en a 9$+i$n +$ 3i2+ an
$rder $2 de2au3+ !$n+ains +"e reas$ns 2$r +"e 2ai3ure +$ ans6er as 6e33 as +"e 2a!+s
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!$ns+i+u+ing +"e 1r$s1e!+i5e de2ense $2 +"e de2endan+ and i+ is s6$rn +$ #4 said
de2endan+, nei+"er a 2$r9a3 5eri2i!a+i$n n$r a se1ara+e a22ida5i+ $2 9eri+ is
ne!essar4.
;"a+ is 6$rse, +"e sa9e $rder 2ur+"er "e3d +"a+ +"e 9$+i$n +$ 3i2+ +"e $rder $2
de2au3+
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de2au3+ed de2endan+s Li9 Te!> C"uan and Eng C"$ng Le$nard$ 6as dis1$sed
$2, 6"i!" de2ini+e34 $ug"+ n$+ +$ "a5e #een +"e !ase. The trial was proceeding with
the testimony of the first witness of plaintiff and he was still under re-cross-
e3amination. :ndoubtedly, the motion to dismiss at that stage and in the light of the
declaration of default against the rest of the defendants was a well calculated surprise
move, obviously designed to secure utmost advantage of the situation, regardless of its
apparent unfairness.
@ut the situation here was aggravated by the indisputable fact that the adverse parties
who were entitled to be notified of such unanticipated dismissal motion did not get due
notice thereof. #ertainly, the non-defaulted defendants had the right to the three-day
prior notice re!uired by ection 5 of =ule (4. *ow could they have had such
indispensable notice when the motion was set for hearing on onday, October (,
(65, whereas the counsel for Lim Tec" #huan, Atty. itoy was personally served with
the notice only on aturday, October (6, (65 and the counsel for %ng #hongLeonardo, Atty. Alcudia, was notified by registered mail which was posted only that
same aturday, October (6, (65 According to #hief Eustice oran, )three days at
least must intervene between the date of service of notice and the date set for the
hearing, otherwise the court may not validly act on the motion.)
?orse, the 8udge was aware of said conse!uences, for simultaneously with his order of
dismissal, he immediately set the case for the e3-parte hearing of the evidence against
the defaulted defendants which was done motu proprio.
@efore proceeding to the discussion of the default aspects of this case, however, it
should not be amiss to advert first to the patent incorrectness, apparent on the face of
the record, of the aforementioned order of dismissal of the case below as regards non-
defaulted defendants Lim and Leonardo. ?hile it is true that said defendants are not
petitioners herein, the #ourt deems it necessary for a full view of the outrageous
procedural strategy conceived by respondents counsel and sanctioned by respondent
court to also ma"e reference to the very evident fact that in ordering said dismissal
respondent court disregarded completely the e3istence of defendants counterclaimwhich it had itself earlier held if indirectly, to be compulsory in nature when it refused to
dismiss the same on the ground alleged by respondent Tan that he doc"eting fees for
the filing thereof had not been paid by defendants.
Indeed, +"a+ said !$un+er!3ai9 is !$91u3s$r4 needs n$ e?+ended e3a#$ra+i$n. As
may be noted in the allegations hereof afore!uoted, it arose out of or is necessarily
connected with the occurrence that is the sub8ect matter of the plaintiffs claim, namely,
plaintiffs allegedly being the widow of the deceased Tee *oon entitled, as such, to
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demand accounting of and to receive the share of her alleged late husband as partner
of defendants Antonio Lim Tanhu and Alfonso Leonardo $g ua in +lory #ommercia
#ompany, the truth of which allegations all the defendants have denied. Defendants
maintain in their counterclaim that plaintiff "new of the falsity of said allegations even
before she filed her complaint, for she had in fact admitted her common-law
relationship with said deceased in a document she had 8ointly e3ecuted with him by
way of agreement to terminate their illegitimate relationship, for which she receivedP5F,FFF from the deceased, and with respect to her pretended share in the capital and
profits in the partnership, it is also defendants posture that she had already
!uitclaimed, with the assistance of able counsel, whatever rights if any she had thereto
in $ovember, (67, for the sum of P4,FFF duly receipted by her, which !uitclaim was,
however, e3ecuted, according to respondent herself in her amended complaint,
through fraud. And having filed her complaint "nowing, according to defendants, as she
ought to have "nown, that the material allegations thereof are false and baseless, she
has caused them to suffer damages. :ndoubtedly, with such allegations, defendantscounterclaim is compulsory, not only because the same evidence to sustain it will also
refute the cause or causes of action alleged in plaintiffs complaint, but also because
from its very nature, it is obvious that the same cannot )remain pending for
independent ad8udication by the court.)
The provision of the rules 8ust cited specifically en8oins that )/i0f a counterclaim has
been pleaded by a defendant prior to the service upon him of the plaintiffs motion to
dismiss, the action shall not be dismissed against the defendants ob8ection unless the
counterclaim can remain pending for independent ad8udication by the court.)
Defendants Lim and Leonardo had no opportunity to ob8ect to the motion to dismiss
before the order granting the same was issued, for the simple reason that they were
not opportunity notified of the motion therefor, but the record shows clearly that at least
defendant Lim immediately brought the matter of their compulsory counterclaim to the
attention of the trial court in his motion for reconsideration of even as the counsel for
the other defendant, Leonardo, predicated his motion on other grounds. &n its order of
respondent court not only upheld the plaintiffs supposed absolute right to choose her
adversaries but also held that the counterclaim is not compulsory, thereby virtuallyma"ing une3plained and ine3plicable (BF-degree turnabout in that respect.
There is another e!ually fundamental consideration why the motion to dismiss should
not have been granted. As +"e 13ain+i228s !$913ain+ "as #een 2ra9ed, a33 +"e si?
de2endan+s are !"arged 6i+" "a5ing a!+ua334 +a>en 1ar+ in a !$ns1ira!4 +$
9isa11r$1ria+e, !$n!ea3 and !$n5er+ +$ +"eir $6n #ene2i+ +"e 1r$2i+s, 1r$1er+ies
and a33 $+"er asse+s $2 +"e 1ar+ners"i1 G3$r4 C$99er!ia3 C$91an4, +$ +"e e?+en+
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+"a+ +"e4 "a5e a33eged34 $rgani=ed a !$r1$ra+i$n, G3$r4 C$99er!ia3 C$91an4,
In!. 6i+" 6"a+ +"e4 "ad i33ega334 g$++en 2r$9 +"e 1ar+ners"i1. :pon such
allegations, no 8udgment finding the e3istence of the alleged conspiracy or holding the
capital of the corporation to be the money of the partnership is legally possible without
the presence of all the defendants. The non-defaulted defendants are alleged to be
stoc"holders of the corporation and any decision depriving the same of all its assets
cannot but pre8udice the interests of said defendants. Accordingly, upon thesepremises, and even prescinding from the other reasons to be discussed anon it is clear
that all the si3 defendants below, defaulted and non-defaulted, are indispensable
parties. =espondents could do no less than grant that they are so on page 2 of their
answer. uch being the case, the !uestioned order of dismissal is e3actly the opposite
of what ought to have been done.
?henever it appears to the court in the course of a proceeding that an indispensable
party has not been 8oined, it is the duty of the court to stop the trial and to order theinclusion of such party. uch an order is unavoidable, for the )general rule with
reference to the ma"ing of parties in a civil action re!uires the 8oinder of all necessary
parties wherever possible, and the 8oinder of all indispensable parties under any and all
conditions, the presence of those latter being a sine $ua non of the e3ercise of 8udicia
power.) /@orlasa vs. Polistico, 5 Phil. 254, at p. 25.0 &t is precisely ) when an
indispensable party is not before the court /that0 the action should be dismissed.) The
absence of an indispensable party renders all subse!uent actuations of the court null
and void, for want of authority to act, not only as to the absent parties but even as to
those present. &n short, what respondent court did here was e3actly the reverse of what
the law ordains G it eliminated those who by law should precisely be 8oined.
As may he noted from the order of respondent court !uoted earlier, which resolved the
motions for reconsideration of the dismissal order filed by the non-defaulted
defendants, *is *onor rationali
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defendant may avoid or mitigate their liability. (a*o vs. +lo, "hil. -
/.)
%his being the rule this court cannot compel the plaintiff to continue
prosecuting her cause of action against the defendants-movants if in the
course of the trial she believes she can enforce it against the remaining
defendants subect only to the limitation provided in Section 0, 1ule 23 ofthe 1ules of #ourt. ... ("ages /0/4, 1ecord.)
$oticeably, *is *onor has employed the same e!uivocal terminology as in plaintiffs
motion of October (B, (65 by referring to the action he had ta"en as being )dismissal
of the complaint against them or their being dropped therefrom), without perceiving that
the reason for the evidently intentional ambiguity is transparent. The apparent idea is to
rely on the theory that under ection (( of =ule 2, parties may be dropped by the court
upon motion of any party at any stage of the action, hence )it is the absolute right
prerogative of the plaintiff to chooseGthe parties he desires to sue, without dictation or
imposition by the court or the adverse party.) &n other words, the ambivalent pose is
suggested that plaintiffs motion of was not predicated on ection of =ule ( but
more on ection (( of =ule 2. @ut the truth is that nothing can be more incorrect. To
start with, the latter rule does not comprehend whimsical and irrational dropping or
adding of parties in a complaint. ?hat it really contemplates is erroneous or mista"en
non-8oinder and mis8oinder of parties. N$ $ne is 2ree +$ :$in an4#$d4 in a !$913ain+
in !$ur+ $n34 +$ dr$1 "i9 un!ere9$ni$us34 3a+er a+ +"e 13easure $2 +"e 13ain+i22.
The rule presupposes that the original inclusion had been made in the honest
conviction that it was proper and the subse!uent dropping is re!uested because it has
turned out that such inclusion was a mista"e. And this is the reason why the rule
ordains that the dropping be )on such terms as are 8ust) G 8ust to all the other parties.
&n the case at bar, there is nothing in the record to legally 8ustify the dropping of the
non-defaulted defendants, Lim and Leonardo. The motion of October (B, (65 cites
none. :sually, the court in granting such a motion in!uires for the reasons and in the
appropriate instances directs the granting of some form of compensation for the troubleundergone by the defendant in answering the complaint, preparing for or proceeding
partially to trial, hiring counsel and ma"ing corresponding e3penses in the premises.
$othing of these, appears in the order in !uestion. ost importantly, *is *onor ought
to have considered that the outright dropping of the non-defaulted defendants Lim and
Leonardo, over their ob8ection at that, would certainly be un8ust not only to the
petitioners, their own parents, who would in conse!uence be entirely defenseless, but
also to Lim and Leonardo themselves who would naturally correspondingly suffer from
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the eventual 8udgment against their parents. =espondent court paid no heed at all to
the mandate that such dropping must be on such terms as are 8ust) G meaning to all
concerned with its legal and factual effects.
T"us, i+ is @ui+e 13ain +"a+ res1$nden+ !$ur+ erred in issuing i+s $rder $2
dis9issa3 as 6e33 as i+s $rder den4ing re!$nsidera+i$n $2 su!" dis9issa3. As ;e
9a>e +"is ru3ing, ;e are n$+ $#3i5i$us $2 +"e !ir!u9s+an!e +"a+ de2endan+s Li9and Le$nard$ are n$+ 1ar+ies "erein. u+ su!" !$nsidera+i$n is in!$nse@uen+ia3.
T"e 2a+e $2 +"e !ase $2 1e+i+i$ners is inse1ara#34 +ied u1 6i+" said $rder $2
dis9issa3, i2 $n34 #e!ause +"e $rder $2 ex%parte "earing 6"i!" dire!+34 a22e!+s
and 1re:udi!es said 1e+i+i$ners is 1redi!a+ed +"ere$n. Ne!essari34, +"ere2$re, ;e
"a5e +$ 1ass $n +"e 3ega3i+4 $2 said $rder, i2 ;e are +$ de!ide +"e !ase $2 "erein
1e+i+i$ners 1r$1er34 and 2air34.
The attitude of the non-defaulted defendants of no longer pursuing further their
!uestioning of the dismissal is from another point of view understandable. On the one
hand, why should they insist on being defendants when plaintiff herself has already
release from her claims On the other hand, as far as their respective parents-co-
defendants are concerned, they must have reali
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much less in the upreme #ourt, and if ?e are adopting a passive attitude in the
premises, it is due only to the fact that this is counsels first offense. @ut similar conduct
on his part in the future will definitely be dealt with more severely. Parties and counsel
would be well advised to avoid such attempts to befuddle the issues as invariably then
will be e3posed for what they are, certainly unethical and degrading to the dignity of the
law profession. oreover, almost always they only betray the inherent wea"ness of the
cause of the party resorting to them.
C C
C$9ing n$6 +$ +"e 9a++er i+se32 $2 de2au3+.
The =ules of #ourt contain a separate rule on the sub8ect of default, =ule (B. @ut said
rule is concerned solely with default resulting from failure of the defendant or
defendants to answer within the reglementary period. =eferring to the simplest form of
default, that is, where there is only one defendant in the action and he fails to answeron time, ection ( of the rule provides that upon )proof of such failure, /the court shall0
declare the defendant in default. Thereupon the court shall proceed to receive the
plaintiffs evidence and render 8udgment granting him such relief as the complaint and
the facts proven may warrant.) This last clause is clarified by ection 4 which says that
)a 8udgment entered against a party in default shall not e3ceed the amount or be
different in "ind from that prayed for.)
:ne!uivocal, in the literal sense, as these provisions are, they do not readily conveythe full import of what they contemplate. To begin with, contrary to the immediate
notion that can be drawn from their language, these provisions are not to be
understood as meaning that default or the failure of the defendant to answer should be
)interpreted as an admission by the said defendant that the plaintiffs cause of action
find support in the law or that plaintiff is entitled to the relief prayed for.)
eing de!3ared in de2au3+ d$es n$+ !$ns+i+u+e a 6ai5er $2 rig"+s e?!e1+ +"a+ $2
#eing "eard and $2 1resen+ing e5iden!e in +"e +ria3 !$ur+.And pursuant to ection
of =ule 5(, )a party who has been declared in default may li"ewise appeal from the8udgment rendered against him as contrary to the evidence or to the law, even if no
petition for relief to set aside the order of default has been presented by him in
accordance with =ule 2B.).
&n other words, a defaulted defendant is not actually thrown out of court. ?hile in a
sense it may be said that by defaulting he leaves himself at the mercy of the court, the
rules see to it that any 8udgment against him must be in accordance with law. The
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evidence to support the plaintiffs cause is, of course, presented in his absence, but the
court is not supposed to admit that which is basically incompetent. Although the
defendant would not be in a position to ob8ect, elementary 8ustice re!uires that, only
legal evidence should be considered against him. &f the evidence presented should not
be sufficient to 8ustify a 8udgment for the plaintiff, the complaint must be dismissed. And
if an unfavorable 8udgment should be 8ustifiable, it cannot e3ceed in amount or be
different in "ind from what is prayed for in the complaint.
&ncidentally, these considerations argue against the present widespread practice of trial
8udges, as was done by *is *onor in this case, of delegating to their cler"s of court the
reception of the plaintiffs evidence when the defendant is in default. uch a Practice is
wrong in principle and orientation. ?hen a defendant allows himself to be declared in
default, he relies on the faith that the court would ta"e care that his rights are not
unduly pre8udiced.
The e3pression, therefore, in ection ( of =ule (B afore!uoted which says that
)thereupon the court shall proceed to receive the plaintiffs evidence etc.) is not to be
ta"en literally. The gain in time and dispatch should the court immediately try the case
on the very day of or shortly after the declaration of default is far outweighed by the
inconvenience and complications involved in having to undo everything already done in
the event the defendant should 8ustify his omission to answer on time.
The foregoing observations, as may be noted, refer to instances where the only
defendant or all the defendants, there being several, are declared in default. There areadditional rules embodying more considerations of 8ustice and e!uity in cases where
there are several defendants against whom a common cause of action is averred and
not all of them answer opportunely or are in default, particularly in reference to the
power of the court to render 8udgment in such situations. Thus, in addition to the
limitation of ection 4 that the 8udgment by default should not be more in amount nor
different in "ind from the reliefs specifically sought by plaintiff in his complaint, ection
5 restricts the authority of the court in rendering 8udgment in the situations 8ust
mentioned as follows'
ec. 5. 5udgment when some defendants answer, and other make difficult.
6 7hen a complaint states a common cause of action against several
defendant some of whom answer, and the others fail to do so, the court
shall try the case against all upon the answer thus filed and render
udgment upon the evidence presented. %he same proceeding applies
when a common cause of action is pleaded in a counterclaim, cross-claim
and third-party claim.
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Iery aptly does #hief Eustice oran elucidate on this provision and the controlling
8urisprudence e3planatory thereof this wise'
?here a complaint states a common cause of action against severa
defendants and some appear to defend the case on the merits while others
ma"e default, the defense interposed by those who appear to litigate the
case inures to the benefit of those who fail to appear, and if the court findsthat a good defense has been made, all of the defendants must be
absolved. &n other words, the answer filed by one or some of the
defendants inures to the benefit of all the others, even those who have not
seasonably filed their answer. /@ueno v. Orti
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tates adopted as ground for its own decision the following ruling of the
$ew Kor" #ourt of %rrors in #lason vs. ;orris, (F Eons., 45'
&t would be unreasonable to hold that because one defendant had made
default, the plaintiff should have a decree even against him, where the
court is satisfied from the proofs offered by the other, that in fact the plaintiff
is not entitled to a decree. /( Law, ed., 7(.0
The reason is simple' 8ustice has to be consistent. The complaint stating a
common cause of action against several defendants, the complainants
rights G or lac" of them G in the controversy have to be the same, and not
different, as against all the defendants although one or some ma"e default
and the other or others appear, 8oin issue, and enter into trial. 9or instance,
in the case of #lason vs. ;orris above cited, the $ew Kor" #ourt of %rrors
in effect held that in such a case if the plaintiff is not entitled to a decree, he
will not be entitled to it, not only as against the defendant appearing and
resisting his action but also as against the one who made default. &n the
case at bar, the cause of action in the plaintiffs complaint was common
against the ayor of anila, %milia atanguihan, and the other defendants
in #ivil #ase $o. (2(B of the lower court. The #ourt of 9irst &nstance in its
8udgment found and held upon the evidence adduced by the plaintiff and
the defendant mayor that as between said plaintiff and defendant
atanguihan the latter was the one legally entitled to occupy the stallsJ and
it decreed, among other things, that said plaintiff immediately vacate them.Paraphrasing the $ew Kor" #ourt of %rrors, it would be unreasonable to
hold now that because atanguihan had made default, the said plaintiff
should be declared, as against her, legally entitled to the occupancy of the
stalls, or to remain therein, although the #ourt of 9irst &nstance was so
firmly satisfied, from the proofs offered by the other defendant, that the
same plaintiff was not entitled to such occupancy that it peremptorily
ordered her to vacate the stalls. &f in the cases of #lason vs. ;orris,
supra, 8row vs. 9e la ega, supra, and ele: vs. 1amas, supra thedecrees entered inured to the benefit of the defaulting defendants, there is
no reason why that entered in said case $o. (2(B should not be held also
to have inured to the benefit of the defaulting defendant atanguihan and
the doctrine in said three cases plainly implies that there is nothing in the
law governing default which would prohibit the court from rendering
8udgment favorable to the defaulting defendant in such cases. &f it inured to
her benefit, it stands to reason that she had a right to claim that benefit, for
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it would not be a benefit if the supposed beneficiary were barred from
claiming itJ and if the benefit necessitated the e3ecution of the decree, she
must be possessed of the right to as" for the e3ecution thereof as she did
when she, by counsel, participated in the petition for e3ecution Anne3 (.
ection of =ule 24 would seem to afford a solid support to the above
considerations. &t provides that when a complaint states a common causeof action against several defendants, some of whom answer, and the
others ma"e default, the court shall try the case against all upon the
answer thus filed and render 8udgment upon the evidence presented by the
parties in court. &t is obvious that under this provision the case is tried
8ointly not only against the defendants answering but also against those
defaulting, and the trial is held upon the answer filed by the formerJ and the
8udgment, if adverse, will pre8udice the defaulting defendants no less than
those who answer. &n other words, the defaulting defendants are heldbound by the answer filed by their co-defendants and by the 8udgment
which the court may render against all of them. @y the same to"en, and by
all rules of e!uity and fair play, if the 8udgment should happen to be
favorable, totally or partially, to the answering defendants, it must
correspondingly benefit the defaulting ones, for it would not be 8ust to let
the 8udgment produce effects as to the defaulting defendants only when
adverse to them and not when favorable.
&n
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defendants some of whom answer and the others fail to do so, the court
shall try the case against all upon the answer thus filed /by some0 and
render 8udgment upon the evidence presented. &n other words, the answer
filed by one or some of the defendants inures to the benefit of all the
others, even those who have not seasonably filed their answer.
&ndeed, since the petition in #ase $o. (6F sets forth a common cause ofaction against all of the respondents therein, a decision in favor of one of
them would necessarily favor the others. &n fact, the main issue, in said
case, is whether Patanao has a timber license to underta"e logging
operations in the disputed area. &t is not possible to decide such issue in
the negative, insofar as the Director of 9orestry, and to settle it otherwise,
as regards the P#, which is merely acting as agent of the Director of
9orestry, and is, therefore, his alter ego, with respect to the disputed forest
area.
S+a+ed di22eren+34, in a33 ins+an!es 6"ere a !$99$n !ause $2 a!+i$n is a33eged
agains+ se5era3 de2endan+s, s$9e $2 6"$9 ans6er and +"e $+"ers d$ n$+, +"e
3a++er $r +"$se in de2au3+ a!@uire a 5es+ed rig"+ n$+ $n34 +$ $6n +"e de2ense
in+er1$sed in +"e ans6er $2 +"eir !$% de2endan+ $r !$%de2endan+s n$+ in de2au3+
#u+ a3s$ +$ e?1e!+ a resu3+ $2 +"e 3i+iga+i$n +$+a334 !$99$n 6i+" +"e9 in >ind and
in a9$un+ 6"e+"er 2a5$ra#3e $r un2a5$ra#3e. The substantive unity of the plaintiffs
cause against all the defendants is carried through to its ad8ective phase as ineluctably
demanded by the homogeneity and indivisibility of 8ustice itself.
&ndeed, since the singleness of the cause of action also inevitably implies that all the
defendants are indispensable parties, the courts power to act is integral and cannot be
split such that it cannot relieve any of them and at the same time render 8udgment
against the rest. #onsidering the tenor of the section in !uestion, it is to be assumed
that when any defendant allows himself to be declared in default "nowing that his
defendant has already answered, he does so trusting in the assurance implicit in the
rule that his default is in essence a mere formality that deprives him of no more thanthe right to ta"e part in the trial and that the court would deem anything done by or for
the answering defendant as done by or for him. The presumption is that otherwise he
would not -have seen to that he would not be in default. Of course, he has to suffer the
conse!uences of whatever the answering defendant may do or fail to do, regardless of
possible adverse conse!uences, but if the complaint has to be dismissed in so far as
the answering defendant is concerned it becomes his inalienable right that the same
be dismissed also as to him. &t does not matter that the dismissal is upon the evidence
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presented by the plaintiff or upon the latters mere desistance, for in both
contingencies, the lac" of sufficient legal basis must be the cause.
The integrity of the common cause of action against all the defendants and the
indispensability of all of them in the proceedings do not permit any possibility of waiver
of the plaintiffs right only as to one or some of them, without including all of them, and
so, as a rule, withdrawal must be deemed to be a confession of wea"ness as to all.This is not only elementary 8usticeJ it also precludes the concomitant ha
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;ON "erein 1e+i+i$ners 6ere en+i+3ed +$ n$+i!e $2 13ain+i228s 9$+i$n +$ dr$1 +"eir
!$%de2endan+s Li9 and Le$nard$, !$nsidering +"a+ 1e+i+i$ners "ad #een
1re5i$us34 de!3ared in de2au3+.
&n this connection, the decisive consideration is that according to the applicable rule,
ection 6, =ule (2, already !uoted above, /(0 even after a defendant has been
declared in default, provided he )files a motion to set aside the order of default, G heshall be entitled to notice of all further proceedings regardless of whether the order of
default is set aside or not) and /0 a party in default who has not filed such a motion to
set aside must still be served with all )substantially amended or supplemented
pleadings.)
&n the instant case, it cannot be denied that petitioners had all filed their motion for
reconsideration of the order declaring them in default. =espondents own answer to the
petition therein ma"es reference to the order which denied said motion for
reconsideration. On page 2 of petitioners memorandum herein this motion is referred
to as )a motion to set aside the order of default.) @ut as ?e have not been favored by
the parties with a copy of the said motion, ?e do not even "now the e3cuse given for
petitioners failure to appear at the pre-trial, and ?e cannot, therefore, determine
whether or not the motion complied with the re!uirements of ection 2 of =ule (B
which ?e have held to be controlling in cases of default for failure to answer on time.
;e d$ n$+, "$6e5er, "a5e "ere, as ear3ier n$+ed, a !ase $2 de2au3+ 2$r 2ai3ure +$
ans6er #u+ $ne 2$r 2ai3ure +$ a11ear a+ +"e 1re%+ria3. ;e rei+era+e, in +"e si+ua+i$nn$6 #e2$re Us, issues "a5e a3read4 #een :$ined. &n fact, evidence had been
partially offered already at the pre-trial and more of it at the actual trial which had
already begun with the first witness of the plaintiff undergoing re-cross-e3amination.
?ith these facts in mind and considering that issues had already been 8oined even as
regards the defaulted defendants, it would be re!uiring the obvious to pretend that
there was still need for an oath or a verification as to the merits of the defense of the
defaulted defendants in their motion to reconsider their default. &nasmuch as none of
the parties had as"ed for a summary 8udgment there can be no !uestion that the
issues 8oined were genuine, and conse!uently, the reason for re!uiring such oath or
verification no longer holds. @esides, it may also be reiterated that being the parents of
the non-defaulted defendants, petitioners must have assumed that their presence was
superfluous, particularly because the cause of action against them as well as their own
defenses are common.
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?e can thus hold as ?e do hold for the purposes of the revival of their right to notice
under ection 6 of =ule (2, that petitioners motion for reconsideration was in
substance legally ade!uate regardless of whether or not it was under oath.
&n any event, the dropping of the defendants Lim and Leonardo from plaintiffs
amended complaint was virtually a second amendment of plaintiffs complaint. And
there can be no doubt that such amendment was substantial, for with the eliminationthereby of two defendants allegedly solidarily liable with their co-defendants, herein
petitioners, it had the effect of increasing proportionally what each of the remaining
defendants, the said petitioners, would have to answer for 8ointly and severally.
Accordingly, notice to petitioners of the plaintiffs motion was legally indispensable
under the rule above-!uoted. #onse!uently, respondent court had no authority to act
on the motion, to dismiss, pursuant to ection 7 of =ule (4, for according to enator
9rancisco, )/t0 he =ules of #ourt clearly provide that no motion shall be acted upon by
the #ourt without the proof of service of notice thereof, together with a copy of the
motion and other papers accompanying it, to all parties concerned at least three days
before the hearing thereof, stating the time and place for the hearing of the motion.
/=ule 7, section 5, 4 and 7, =ules of #ourt /now ec. (4, new =ules0. ?hen the
motion does not comply with this re!uirement, it is not a motion. &t presents no
!uestion which the court could decide. And the #ourt ac!uires no 8urisdiction to
consider it.
C 5 C
The foregoing considerations notwithstanding, i+ is res1$nden+s8 1$si+i$n +"a+
!er+i$rari is n$+ +"e 1r$1er re9ed4 $2 1e+i+i$ners. &t is contended that inasmuch as
said petitioners have in fact made their appeal already by filing the re!uired notice of
appeal and appeal bond and a motion for e3tension to file their record on appeal,
which motion was granted by respondent court, their only recourse is to prosecute that
appeal. Additionally, it is also maintained that since petitioners have e3pressly
withdrawn their motion to !uash of impugning the order they have lost their right to
assail by certiorari the actuations of respondent court now being !uestioned,
respondent court not having been given the opportunity to correct any possible error it
might have committed.
?e do not agree. The essential purpose of certiorari is to "eep the proceedings in
lower 8udicial courts and tribunals within legal bounds, so that due process and the rule
of law may prevail at all times and arbitrariness, whimsicality and unfairness which
8ustice abhors may immediately be stamped out before graver in8ury, 8uridical and
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otherwise, ensues. ?hile generally these ob8ectives may well be attained in an
ordinary appeal, it is undoubtedly the better rule to allow the special remedy of
certiorari at the option of the party adversely affected, when the irregularity committed
by the trial court is so grave and so far reaching in its conse!uences that the long and
cumbersome procedure of appeal will only further aggravate the situation of the
aggrieved party because other untoward actuations are li"ely to materiali $2 !$ur+, +"e su#se@uen+ using $2 +"e sa9e
as #asis 2$r i+s :udg9en+ and +"e rendi+i$n $2 su!" :udg9en+.
9or at least three reasons which ?e have already fully discussed above, the order of
dismissal of October (, (65 is unworthy of Our sanction' /(0 there was no timely
notice of the motion therefor to the non-defaulted defendants, aside from there being
no notice at all to herein petitionersJ /0 the common answer of the defendants,
including the non-defaulted, contained a compulsory counterclaim incapable of being
determined in an independent actionJ and /20 the immediate effect of such dismissalwas the removal of the two non-defaulted defendants as parties, and inasmuch as they
are both indispensable parties in the case, the court conse!uently lost the) sine !ua
non of the e3ercise of 8udicial power), per
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be reviewing the case as against the two non-defaulted defendants who are not before
:s not being parties hereto. :pon the other hand, for :s to hold that the order of
dismissal should be allowed to stand, as contended by respondents themselves who
insist that the same is already final, not only because the period for its finality has long
passed but also because allegedly, albeit not very accurately, said non-defaulted
defendants unsuccessfully tried to have it set aside by the #ourt of Appeals whose
decision on their petition is also already final, ?e would have to disregard whateverevidence had been presented by the plaintiff against them and, of course, the findings
of respondent court based thereon which, as the assailed decision shows, are adverse
to them.
&n other words, whichever of the two apparent remedies the #ourt chooses, it would
necessarily entail some "ind of possible 8uridical imperfection. pea"ing of their
respective practical or pragmatic effects, to annul the dismissal would inevitably
pre8udice the rights of the non-defaulted defendants whom ?e have not heard and whoeven respondents would not wish to have anything anymore to do with the case. On
the other hand, to include petitioners in the dismissal would naturally set at naught
every effort private respondent has made to establish or prove her case thru means
sanctioned by respondent court. &n short, ?e are confronted with a legal para-dilemma.
All things considered, after careful and mature deliberation, the #ourt has arrived at the
conclusion that as between the two possible alternatives 8ust stated, it would only be
fair, e!uitable and proper to uphold the position of petitioners. &n other words, ?e rule
that the order of dismissal is in law a dismissal of the whole case of the plaintiff,including as to petitioners herein. #onse!uently, all proceedings held by respondent
court subse!uent thereto including and principally its decision of are illegal and should
be set aside.
This conclusion is fully 8ustified by the following considerations of e!uity'
(. &t is very clear to :s that the procedural maneuver resorted to by private respondent
in securing the decision in her favor was ill-conceived. &t was characteri
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why such tactics had to be availed of. ?e cannot directly or indirectly give Our assent
to the commission of unfairness and ine!uity in the application of the rules of
procedure, particularly when the propriety of reliance thereon is not beyond
controversy.
. The theories of remedial law pursued by private respondents, although approved by
*is *onor, run counter to such basic principles in the rules on default and suchelementary rules on dismissal of actions and notice of motions that no trial court should
be unaware of or should be mista"en in applying. ?e are at a loss as to why *is *onor
failed to see through counsels ine!uitous strategy, when the provisions /(0 on the
three-day rule on notice of motions, ection 5 of =ule (4, /0 against dismissal of
actions on motion of plaintiff when there is a compulsory counterclaim, ection , =ule
(, /20 against permitting the absence of indispensable parties, ection , =ule 2, /50
on service of papers upon defendants in default when there are substantia
amendments to pleadings, ection 6, =ule (2, and /40 on the unity and integrity of thefate of defendants in default with those not in default where the cause of action against
them and their own defenses are common, ection 5, =ule (B, are so plain and the
8urisprudence declaratory of their intent and proper construction are so readily
comprehensible that any error as to their application would be unusual in any
competent trial court.
2. After all, all the malactuations of respondent court are traceable to the initiative of
private respondent and1or her counsel. he cannot, therefore, complain that she is
being made to un8ustifiably suffer the conse!uences of what ?e have found to beerroneous orders of respondent court. &t is only fair that she should not be allowed to
benefit from her own frustrated ob8ective of securing a one-sided decision.
5. ore importantly, ?e do not hesitate to hold that on the basis of its own recitals, the
decision in !uestion cannot stand close scrutiny. ?hat is more, the very considerations
contained therein reveal convincingly the inherent wea"ness of the cause of the
plaintiff. To be sure, ?e have been giving serious thought to the idea of merely
returning this case for a resumption of trial by setting aside the order of dismissal ofOctober (, (65, with all its attendant difficulties on account of its adverse effects on
parties who have not been heard, but upon closer study of the pleadings and the
decision and other circumstances e3tant in the record before :s, ?e are now
persuaded that such a course of action would only lead to more legal complications
incident to attempts on the part of the parties concerned to desperately s!uee
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%ven a mere superficial reading of the decision would immediately reveal that it is
littered on its face with deficiencies and imperfections which would have had no reason
for being were there less haste and more circumspection in rendering the same.
=ec"lessness in 8umping to unwarranted conclusions, both factual and legal, is at once
evident in its findings relative precisely to the main bases themselves of the reliefs
granted. &t is apparent therein that no effort has been made to avoid glaring
inconsistencies. ?here references are made to codal provisions and 8urisprudence,inaccuracy and inapplicability are at once manifest. &t hardly commends itself as a
deliberate and consciencious ad8udication of a litigation which, considering the
substantial value of the sub8ect matter it involves and the unprecedented procedure
that was followed by respondents counsel, calls for greater attention and s"ill than the
general run of cases would.
Inter alia, the following features of the decision ma"e it highly improbable that if ?e
too" another course of action, private respondent would still be able to ma"e out anycase against petitioners, not to spea" of their co-defendants who have already been
e3onerated by respondent herself thru her motion to dismiss'
(. According to *is *onors own statement of plaintiffs case, )she is the widow of the
late Tee *oon Po #huan /Po #huan, for short0 who was then one of the partners in the
commercial partnership, +lory #ommercial #o. with defendants Antonio Lim Tanhu
/Lim Tanhu, for short0 and Alfonso Leonardo $g ua /$g ua, for short0 as co-partnersJ
that after the death of her husband on arch ((, (677 she is entitled to share not only
in the capital and profits of the partnership but also in the other assets, both real andpersonal, ac!uired by the partnership with funds of the latter during its lifetime.)
=elatedly, in the latter part of the decision, the findings are to the following effect' .
That the herein plaintiff Tan Put and her late husband Po #huan married at
the Philippine &ndependent #hurch of #ebu #ity on December, F, (656J
that Po #huan died on arch ((, (677J that the plaintiff and the late Po
#huan were childless but the former has a foster son Antonio $u;e< whom
she has reared since his birth with whom she lives up to the presentJ that
prior to the marriage of the plaintiff to Po #huan the latter was already
managing the partnership +lory #ommercial #o. then engaged in a little
business in hardware at analili t., #ebu #ityJ that prior to and 8ust after
the marriage of the plaintiff to Po #huan she was engaged in the drugstore
businessJ that not long after her marriage, upon the suggestion of Po
#huan the plaintiff sold her drugstore for P(4,FFF.FF which amount she
gave to her husband in the presence of defendant Lim Tanhu and was
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invested in the partnership +lory #ommercial #o. sometime in (64FJ that
after the investment of the above-stated amount in the partnership its
business flourished and it embar"ed in the import business and also
engaged in the wholesale and retail trade of cement and +& sheets and
under huge profitsJ
333 333 333
That the late Po #huan was the one who actively managed the business of
the partnership +lory #ommercial #o. he was the one who made the final
decisions and approved the appointments of new personnel who were
ta"en in by the partnershipJ that the late Po #huan and defendants Lim
Tanhu and $g ua are brothers, the latter two /0 being the elder brothers
of the formerJ that defendants Lim Tanhu and $g ua are both naturali
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at the pre- trial serves to put the 8udge on notice of their respective basic positions, in
order that in appropriate cases he may, if necessary in the interest of 8ustice and a
more accurate determination of the facts, ma"e in!uiries about or re!uire clarifications
of matters ta"en up at the pre-trial, before finally resolving any issue of fact or of law. &n
brief, the pre-trial constitutes part and parcel of the proceedings, and hence, matters
dealt with therein may not be disregarded in the process of decision ma"ing.
Otherwise, the real essence of compulsory pre-trial would be insignificant andworthless.
$ow, applying these postulates to the findings of respondent court 8ust !uoted, i+ 6i3
#e $#ser5ed +"a+ +"e !$ur+8s !$n!3usi$n a#$u+ +"e su11$sed 9arriage $2 13ain+i22
+$ +"e de!eased Tee H$$n Li9 P$ C"uan is !$n+rar4 +$ +"e 6eig"+ $2 +"e
e5iden!e #r$ug"+ #e2$re i+ during +"e +ria3 and +"e 1re%+ria3.
The primary evidence of a marriage must be an authentic copy of the marriage
contract. ?hile a marriage may also be proved by other competent evidence, the
absence of the contract must first be satisfactorily e3plained. &n the case at bar, the
purported certification issued by a ons. Eose . =ecoleto, @ishop, Philippine
&ndependent #hurch, #ebu #ity, is not, therefore, competent evidence, there being
absolutely no showing as to unavailability of the marriage contract and, indeed, as to
the authenticity of the signature of said certifier, the 8urat allegedly signed by a second
assistant provincial fiscal not being authoriim @eng. @ut she testified she was childless. o which is which &n any event, if on
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the strength of this document, $u;e< is actually the legitimate son of Tan Put and not
her adopted son, he would have been but (2 years old in (656, the year of her alleged
marriage to Po #huan, and even then, considering such age, his testimony in regard
thereto would still be suspect.
$ow, as against such flimsy evidence of plaintiff, the court had before it, two
documents of great weight belying the pretended marriage. ?e refer to /(0 %3hibit LL,the income ta3 return of the deceased Tee *oon Lim Po #huan indicating that the
name of his wife was Ang ic" Tin and /0 the !uitclaim, Anne3 A of the answer,
wherein plaintiff Tan Put stated that she had been living with the deceased without
benefit of marriage and that she was his )common-law wife). urely, these two
documents are far more reliable than all the evidence of the plaintiff put together.
Of course, %3hibit LL is what might be termed as pre-trial evidence. @ut it is evidence
offered to the 8udge himself, not to the cler" of court, and should have at least moved
him to as" plaintiff to e3plain if not rebut it before 8umping to the conclusion regarding
her alleged marriage to the deceased, Po #huan. And in regard to the !uitclaim
containing the admission of a common-law relationship only, it is to be observed that
*is *onor found that )defendants Lim Tanhu and $g ua had the plaintiff e3ecute a
!uitclaim on $ovember 6, (67 /Anne3 )A), Answer0 where they gave plaintiff the
amount of P4,FFF as her share in the capital and profits of the business of +lory
#ommercial #o. which was engaged in the hardware business), without ma"ing
mention of any evidence of fraud and misrepresentation in its e3ecution, thereby
indicating either that no evidence to prove that allegation of the plaintiff had beenpresented by her or that whatever evidence was actually offered did not produce
persuasion upon the court. tated differently, since the e3istence of the !uitclaim has
been duly established without any circumstance to detract from its legal import, the
court should have held that plaintiff was bound by her admission therein that she was
the common-law wife only of Po #huan and what is more, that she had already
renounced for valuable consideration whatever claim she might have relative to the
partnership +lory #ommercial #o.
And when it is borne in mind that in addition to all these considerations, there are
mentioned and discussed in the memorandum of petitioners /(0 the certification of the
Local #ivil =egistrar of #ebu #ity and /0 a similar certification of the Apostolic Prefect
of the Philippine &ndependent #hurch, Parish of to. $i;o, #ebu #ity, that their
respective official records corresponding to December (656 to December (64F do not
show any marriage between Tee *oon Lim Po #huan and Tan Put, neither of which
certifications have been impugned by respondent until now, it stands to reason that
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plaintiffs claim of marriage is really unfounded. ?ithal, there is still another document,
also mentioned and discussed in the same memorandum and unimpugned by
respondents, a written agreement e3ecuted in #hinese, but purportedly translated into
%nglish by the #hinese #onsul of #ebu, between Tan Put and Tee *oon Lim Po #huan
to the following effect'
#O$:LAT% O9 T*% =%P:@L O9 #*&$A #ebu #ity, Philippines
T = A $ L A T & O $
This is to certify that (, iss Tan >i %ng Alias Tan Put, have lived with r.
Lim Po #huan alias Tee*oon since (656 but it recently occurs that we are
incompatible with each other and are not in the position to "eep living
together permanently. ?ith the mutual concurrence, we decided to
terminate the e3isting relationship of common law-marriage and promised
not to interfere each others affairs from now on. The 9orty ThousandPesos /P5F,FFF.FF0 has been given to me by r. Lim Po #huan for my
subsistence.
?itnesses'
r. Lim @eng +uan r. *uang ing e
igned on the (F day of the th month of the 45th year of the =epublic of
#hina /corresponding to the year (6740.
/+D0 TA$ >& %$+
Ierified from the records. EO=+% TA@A= /Pp. B2-B5, =ecord.0
&ndeed, not only does this document prove that plaintiffs relation to the deceased was
that of a common-law wife but that they had settled their property interests with the
payment to her of P5F,FFF.
In +"e 3ig"+ $2 a33 +"ese !ir!u9s+an!es, ;e 2ind n$ a3+erna+i5e #u+ +$ "$3d +"a+
13ain+i22 Tan Pu+8s a33ega+i$n +"a+ s"e is +"e 6id$6 $2 Tee H$$n Li9 P$ C"uan "as
n$+ #een sa+is2a!+$ri34 es+a#3is"ed and +"a+, $n +"e !$n+rar4, +"e e5iden!e $n
re!$rd !$n5in!ing34 s"$6s +"a+ "er re3a+i$n 6i+" said de!eased 6as +"a+ $2 a
!$99$n%3a6 6i2e and 2ur+"er9$re, +"a+ a33 "er !3ai9s agains+ +"e !$91an4 and
i+s sur5i5ing 1ar+ners as 6e33 as +"$se agains+ +"e es+a+e $2 +"e de!eased "a5e
a3read4 #een se++3ed and 1aid.?e ta"e 8udicial notice of the fact that the respective
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counsel who assisted the parties in the !uitclaim, Attys. *. *ermosisima and $atalio
#astillo, are members in good standing of the Philippine @ar, with the particularity that
the latter has been a member of the #abinet and of the *ouse of =epresentatives of
the Philippines, hence, absent any credible proof that they had allowed themselves to
be parties to a fraudulent document *is *onor did right in recogni
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inas9u!" as 6"a+ 6as #eing rendered 6as a :udg9en+ #4 de2au3+, su!" +"e$r4
s"$u3d n$+ "a5e #een a33$6ed +$ #e +"e su#:e!+ $2 an4 e5iden!e. @ut inasmuch as
it was the cler" of court who received the evidence, it is understandable that he failed
to observe the rule. Then, on the other hand, if it was her capital that made the
partnership flourish, why would she claim to be entitled to only to 1 2of its assets and
profits :nder her theory found proven by respondent court, she was actually the
owner of everything, particularly because *is *onor also found )that defendants LimTanhu and $g ua were partners in the name but they were employees of Po #huan
that defendants Lim Tanhu and $g ua had no means of livelihood at the time of their
employment with the +lory #ommercial #o. under the management of the late Po
#huan e3cept their salaries therefromJ ...) /p. , id.0 ?hy then does she claim only
12share &s this an indication of her generosity towards defendants or of a concocted
cause of action e3isting only in her confused imagination engendered by the death of
her common-law husband with whom she had settled her common-law claim for
recompense of her services as common law wife for less than what she must have"nown would go to his legitimate wife and children
A!+ua334, as 9a4 #e n$+ed 2r$9 +"e de!isi$n i+se32, +"e +ria3 !$ur+ 6as !$n2used
as +$ +"e 1ar+i!i1a+i$n $2 de2endan+s Li9 Tan"u and Ng Sua in G3$r4 C$99er!ia3
C$. A+ $ne 1$in+, +"e4 6ere dee9ed 1ar+ners, a+ an$+"er 1$in+ 9ere e913$4ees
and +"en e3se6"ere as 1ar+ners%e913$4ees, a ne634 2$und !$n!e1+, +$ #e sure, in
+"e 3a6 $n 1ar+ners"i1. And the confusion is worse comfounded in the 8udgment
which allows these )partners in name) and )partners-employees) or employees who
had no means of livelihood and who must not have contributed any capital in the
business, )as Po #huan was practically the owner of the partnership having the
controlling interest), 12each of the huge assets and profits of the partnership
&ncidentally, it may be observed at this 8uncture that the decision has made Po #huan
play the inconsistent role of being )practically the owner) but at the same time getting
his capital from the P(4,FFF given to him by plaintiff and from which capital the
business allegedly )flourished.)
Anent the allegation of plaintiff that the properties shown by her e3hibits to be in thenames of defendants Lim Tanhu and $g ua were bought by them with partnership
funds, *is *onor confirmed the same by finding and holding that )it is li"ewise clear
that real properties together with the improvements in the names of defendants Lim
Tanhu and $g ua were ac!uired with partnership funds as these defendants were
only partners-employees of deceased Po #huan in the +lory #ommercial #o. until the
time of his death on arch ((, (677.) /p. 2F,id.0 &t &s Our considered view, however
that this conclusion of *is *onor is based on nothing but pure unwarranted con8ecture.
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$owhere is it shown in the decision how said defendants could have e3tracted money
from the partnership in the fraudulent and illegal manner pretended by plaintiff. $either
in the testimony of $u;e< nor in that of plaintiff, as these are summari
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the allegation in the amended complaint to the effect that )defendants Antonio Lim
Tanhu, Alfonso Leonardo $g ua, Lim Tec" #huan and %ng #hong Leonardo, through
fraud and machination, too" actual and active management of the partnership and
although Tee *oon Lim Po #huan was the manager of +lory #ommercial #o.
defendants managed to use the funds of the partnership to purchase lands and
buildings etc. /Par. 5, p. of amended complaint, Anne3 @ of petition0 and should not
have been permitted to be proven by the hearing officer, who naturally did not "nowany better.
oreover, it is very significant that a!!$rding +$ +"e 5er4 +a? de!3ara+i$ns and 3and
+i+3es 3is+ed in +"e de!isi$n, 9$s+ i2 n$+ a33 $2 +"e 1r$1er+ies su11$sed +$ "a5e
#een a!@uired #4 +"e de2endan+s Li9 Tan"u and Ng Sua 6i+" 2unds $2 +"e
1ar+ners"i1 a11ear +$ "a5e #een +rans2erred +$ +"eir na9es $n34 in -(( $r 3a+er,
+"a+ is, 3$ng a2+er +"e 1ar+ners"i1 "ad #een au+$9a+i!a334 diss$35ed as a resu3+ $2
+"e dea+" $2 P$ C"uan.Accordingly, defendants have no obligation to account toanyone for such ac!uisitions in the absence of clear proof that they had violated the
trust of Po #huan during the e3istence of the partnership.
T"ere are $+"er 1ar+i!u3ars 6"i!" s"$u3d "a5e !aused His H$n$r +$ readi34
dis#e3ie5e 13ain+i22s8 1re+ensi$ns. Nue= +es+i2ied +"a+ 2r$9 -(/ $r -(
6$u3d +a>e Us +$ -(& $r -(&). Sin!e a!!$rding +$ E?"i#i+ LL, +"e #a1+is9a3
!er+i2i!a+e 1r$du!ed #4 +"e sa9e 6i+ness as "is #ir+" !er+i2i!a+e, s"$6s "e 6as#$rn in Mar!", -(&, "$6 !$u3d "e "a5e s+ar+ed 9anaging G3$r4 C$99er!ia3 C$.
in -(&( 6"en "e 9us+ "a5e #een #are34 si? $r se5en 4ears $3d &t should not have
escaped *is *onors attention that the photographs showing the premises of Philippine
etal &ndustries after its organi
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although he did not go there always being a mere employee of +lory #ommercial #o.)
/p. , Anne3 the decision.0
T"e de!isi$n is ra+"er e91"a+i! in +"a+ Li9 Tan"u and Ng Sua "ad n$ >n$6n
in!$9e e?!e1+ +"eir sa3aries.Actually, it is not stated, however, from what evidence
such conclusion was derived in so far as $g ua is concerned. On the other hand, with
respect to Lim Tanhu, the decision itself states that according to %3hibit $$-Pre trial, inthe supposed income ta3 return of Lim Tanhu for (675, he had an income of P5,BFF as
salary from Philippine etal &ndustries alone and had a total assess sable net income
of P2,6F. that year for which he paid a ta3 of P5,747.FF. /p. (5. Anne3 L, id.0 And
per %3hibit ++-Pretrial in the year, he had a net income of P2,FFF for which be paid a
ta3 of P2,4(.5F. /id.0 As early as (67, )his fishing business in adride8os #ebu was
ma"ing money, and he reported )a net gain from operation /in0 the amount of PB74.75)
/id., per %3hibit II-Pre-trial.0 9rom what then did his *onor gather the conclusion that
all the properties registered in his name have come from funds malversed from thepartnership
I+ is ra+"er unusua3 +"a+ His H$n$r de35ed in+$ 2inan!ia3 s+a+e9en+s and #$$>s $2
G3$r4 C$99er!ia3 C$. 6i+"$u+ +"e aid $2 an4 a!!$un+an+ $r 6i+"$u+ +"e sa9e
#eing e?13ained #4 an4 6i+ness 6"$ "ad 1re1ared +"e9 $r 6"$ "as >n$63edge
$2 +"e en+ries +"erein. T"is 9us+ #e +"e reas$n 6"4 +"ere are a11aren+
in!$nsis+en!ies and ina!!ura!ies in +"e !$n!3usi$ns His H$n$r 9ade $u+ $2
+"e9. &n %3hibit -Pre-trial, the reported total assets of the company amounted to
P,2B,57F. as of December, (674, and yet, %3hibit TT-Pre-trial, according to *is*onor, showed that the total value of goods available as of the same date was
P((,(77,2.7. On the other hand, per %3hibit HH-Pre-trial, the supposed balance
sheet of the company for (677, )the value of inventoried merchandise, both local and
imported), as found by *is *onor, was P4B5,F25.2B. Again, as of December 2(, (677,
the value of the companys goods available for sale was P4,45,F4F.B, per %3hibit KK
and KK-Pre-trial. Then, per %3hibit &&-2-Pre-trial, the supposed @oo" of Account,
whatever that is, of the company showed its )cash analysis) was P(,2,(B.44. ?e
do not hesitate to ma"e the observation that *is *onor, unless he is a certified publicaccountant, was hardly !ualified to read such e3hibits and draw any definite
conclusions therefrom, without ris" of erring and committing an in8ustice. &n any event,
there is no comprehensible e3planation in the decision of the conclusion of *is *onor
that there were P(,2,(B.44 cash money defendants have to account for,
particularly when it can be very clearly seen in %3hibits ((-5, ((-5- A, ((-4 and ((-7-
Pre-trial, +lory #ommercial #o. had accounts payable as of December 2(, (674 in the
amount of P5,BF(,2(.(. /p. (4, id.0 :nder the circumstances, ?e are not prepared to
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permit anyone to predicate any claim or right from respondent courts unaided e3ercise
of accounting "nowledge.
Additionally, ?e note that the decision has not made any finding regarding the
allegation in the amended complaint that a corporation denominated +lory #ommercial
#o., &nc. was organi