Civpro Cases.docx

G.R. No. 160242

10. With the contracted work, third-party plaintiff rented the equipment of the plaintiff Monark;

May 17, 2005

ASIAN CONSTRUCTION CORPORATION, petitioner, vs.

AND

DEVELOPMENT

COURT OF APPEALS and CORPORATION, respondents.

MONARK

EQUIPMENT

11. Third-party plaintiff rendered and complied with its contracted works with third-party defendant using plaintiff’s (Monark) rented equipment. But, third-party defendant BECTHEL did not pay for the services of third-party plaintiff ASIAKONSTRUKT that resulted to the non-payment of plaintiff Monark’s claim;

CALLEJO, SR., J.: On March 13, 2001, Monark Equipment Corporation (MEC) filed a Complaint1 for a sum of money with damages against the Asian Construction and Development Corporation (ACDC) with the Regional Trial Court (RTC) of Quezon City. The complaint alleged the following: ACDC leased Caterpillar generator sets and Amida mobile floodlighting systems from MEC during the period of March 13 to July 15, 1998 but failed, despite demands, to pay the rentals therefor in the total amount of P4,313,935.00; from July 14 to August 25, 1998, various equipments from MEC were, likewise, leased by ACDC for the latter’s power plant in Mauban, Quezon, and that there was still a balance of P456,666.67; and ACDC also purchased and took custody of various equipment parts from MEC for the agreed price of P237,336.20 which, despite demands, ACDC failed to pay. MEC prayed that judgment be rendered in its favor, thus: 1. Ordering defendant to pay the plaintiff the total amount of FIVE MILLION SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86); 2. Ordering defendant to pay the plaintiff legal interest of 12% per annum on the principal obligations in the total amount of FIVE MILLION SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86) computed from the date the obligations became due until fully paid; 3. Ordering defendant to pay attorney’s fees in the amount equivalent to 15% of the amount of claim; 4. Ordering defendant to pay all costs of litigation. Plaintiff prays for such other reliefs as may be just and equitable under the premises.2 ACDC filed a motion to file and admit answer with third-party complaint against Becthel Overseas Corporation (Becthel). In its answer, ACDC admitted its indebtedness to MEC in the amount of P5,071,335.86 but alleged the following special and affirmative defenses: 5. Defendant has incurred an obligation with plaintiff, in the amount of P5,071,335.86. But third-party defendant fails and refuses to pay its overdue obligation in connection with the leased equipment used by defendant to comply with its contracted services; 6. The equipment covered by the lease were all used in the construction project of Becthel in Mauban, Quezon, and Expo in Pampanga and defendant was not yet paid of its services that resulted to the non-payment of rentals on the leased equipment.3 And by way of third-party complaint against Becthel as third-party defendant, ACDC alleged that: 7. Third-party plaintiff repleads the foregoing allegations in the preceding paragraphs as may be material and pertinent hereto; 8. Third-party BECTHEL OVERSEAS CORPORATION (herein called "Becthel") is a corporation duly organized and existing under the laws of the United States of America but may be served with summons at Barangay Cagsiay I, Mauban, Quezon 4330, Philippines; 9. Third-party defendant Becthel contracted the services of thirdparty plaintiff to do construction work at its Mauban, Quezon project using the leased equipment of plaintiff Monark;

12. Despite repeated demands, third-party defendant failed and refused to pay its overdue obligation to third-party plaintiff ASIAKONSTRUKT, and third-party defendant needs to be impleaded in this case for contribution, indemnity, subrogation or other reliefs to off-set or to pay the amount of money claim of plaintiff Monark on the leased equipment used in the Mauban, Quezon project in the total amount of P456,666.67; 13. By reason thereof, third-party plaintiff was compelled to prosecute its claim against third-party defendant and hired the services of undersigned counsel for an attorney’s fees of P500,000.00.4 ACDC prayed that judgment be rendered in its favor dismissing the complaint and ordering the third-party defendant (Becthel) to pay P456,666.67 plus interest thereon and attorney’s fees.5 MEC opposed the motion of ACDC to file a third-party complaint against Becthel on the ground that the defendant had already admitted its principal obligation to MEC in the amount of P5,071,335.86; the transaction between it and ACDC, on the one hand, and between ACDC and Becthel, on the other, were independent transactions. Furthermore, the allowance of the third-party complaint would result in undue delays in the disposition of the case.6 MEC then filed a motion for summary judgment, alleging therein that there was no genuine issue as to the obligation of ACDC to MEC in the total amount of P5,071,335.86, the only issue for the trial court’s resolution being the amount of attorney’s fees and costs of litigation.7 ACDC opposed the motion for summary judgment, alleging that there was a genuine issue with respect to the amount of P5,071,335.86 being claimed by MEC, and that it had a third-party complaint against Becthel in connection with the reliefs sought against it which had to be litigated.8 In its reply, MEC alleged that the demand of ACDC in its special and affirmative defenses partook of the nature of a negative pregnant, and that there was a need for a hearing on its claim for damages. On August 2, 2001, the trial court issued a Resolution denying the motion of ACDC for leave to file a third-party complaint and granting the motion of MEC, which the trial court considered as a motion for a judgment on the pleadings. The fallo of the resolution reads: ACCORDINGLY, this Court finds defendant Asian Construction and Development Corporation liable to pay plaintiff Monark Equipment Corporation and is hereby ordered to pay plaintiff the amount of FIVE MILLION SEVENTY-ONE THOUSAND AND THREE HUNDRED THIRTY-FIVE & 86/100 PESOS (P5,071,335.86) plus 12% interest from the filing of the complaint until fully paid. SO ORDERED.9 ACDC appealed the resolution to the Court of Appeals (CA), alleging that – I. THE LOWER COURT ERRED IN DENYING THE MOTION TO FILE AND ADMIT ANSWER WITH THIRD-PARTY COMPLAINT; II. THE LOWER COURT ERRED IN GRANTING THE MOTION FOR SUMMARY JUDGMENT;

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III. THE LOWER COURT ERRED WHEN IT DENIED THE THIRD-PARTY COMPLAINT AND ORDERED DEFENDANT TO PAY THE AMOUNT OF P5,071,335.86 PLUS INTEREST OF 12% PER ANNUM.10 On July 18, 2001, the CA rendered judgment dismissing the appeal and affirming the assailed decision. The appellate court ruled that since MEC had prayed for judgment on the pleadings, it thereby waived its claim for damages other than the amount of P5,071,335.86; hence, there was no longer a genuine issue to be resolved by the court which necessitated trial. The appellate court sustained the disallowance of the third-party complaint of ACDC against Becthel on the ground that the transaction between the said parties did not arise out of the same transaction on which MEC’s claim was based. Its motion for reconsideration of the decision having been denied, ACDC, now the petitioner, filed the present petition for review on certiorari, and raises the following issues: I. WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER; AND II. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS PROPER.11 Citing the rulings of this Court in Allied Banking Corporation v. Court of Appeals12 and British Airways v. Court of Appeals,13 the petitioner avers that the CA erred in ruling that in denying its motion for leave to file a third-party complaint, the RTC acted in accordance with the Rules of Court and case law. The petitioner maintains that it raised genuine issues in its answer; hence, it was improper for the trial court to render judgment on the pleadings: With due respect, the judgment on the pleadings affirmed by the Court of Appeals is not, likewise, proper considering that the Answer with Third-Party Complaint, although it admitted the obligation to respondent, tendered an issue of whether the respondent’s claim is connected with the third-party claim. As alleged in the Answer with Third-Party Complaint, it is admitted then by respondent, for purposes of judgment on the pleadings, that failure to pay respondent was in connection of Becthel Overseas Corporation’s failure to pay its obligation to petitioner and that the equipment leased was used in connection with the Becthel Overseas Corporation project. This tendered issue could not just be disregarded in the light of the third-party complaint filed by herein petitioner and third-party plaintiff which, as argued in the first discussion/argument, is proper and should have been given due course.14 The petition is denied for lack of merit. Section 11, Rule 6 of the Rules of Court provides: Sec. 11. Third (fourth, etc.)-party complaint. – A third (fourth, etc.) – party complaint is a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third (fourth, etc.) – party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent’s claim. Furthermore, Section 1, Rule 34 of the Rules of Court provides that the Court may render judgment on the pleadings, as follows: Section 1. Judgment on the pleadings. – Where an answer fails to tender an issue, or, otherwise, admits the material allegations of the adverse party’s pleading, the court may, on motion of that party, direct judgment on such pleading. However, in actions for declaration of nullity or annulment of marriage or for legal separation, the material facts alleged in the complaint shall always be proved. The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to assert an independent claim against a third-party which

he, otherwise, would assert in another action, thus preventing multiplicity of suits. All the rights of the parties concerned would then be adjudicated in one proceeding. This is a rule of procedure and does not create a substantial right. Neither does it abridge, enlarge, or nullify the substantial rights of any litigant.15 This right to file a third-party complaint against a third-party rests in the discretion of the trial court. The third-party complaint is actually independent of, separate and distinct from the plaintiff’s complaint, such that were it not for the rule, it would have to be filed separately from the original complaint.16 A prerequisite to the exercise of such right is that some substantive basis for a third-party claim be found to exist, whether the basis be one of indemnity, subrogation, contribution or other substantive right.17 The bringing of a third-party defendant is proper if he would be liable to the plaintiff or to the defendant or both for all or part of the plaintiff’s claim against the original defendant, although the thirdparty defendant’s liability arises out of another transaction.18 The defendant may implead another as third-party defendant (a) on an allegation of liability of the latter to the defendant for contribution, indemnity, subrogation or any other relief; (b) on the ground of direct liability of the third-party defendant to the plaintiff; or (c) the liability of the third-party defendant to both the plaintiff and the defendant.19 There must be a causal connection between the claim of the plaintiff in his complaint and a claim for contribution, indemnity or other relief of the defendant against the third-party defendant. In Capayas v. Court of First Instance,20 the Court made out the following tests: (1) whether it arises out of the same transaction on which the plaintiff’s claim is based; or whether the third-party claim, although arising out of another or different contract or transaction, is connected with the plaintiff’s claim; (2) whether the third-party defendant would be liable to the plaintiff or to the defendant for all or part of the plaintiff’s claim against the original defendant, although the third-party defendant’s liability arises out of another transaction; and (3) whether the third-party defendant may assert any defenses which the third-party plaintiff has or may have to the plaintiff’s claim. The third-party complaint does not have to show with certainty that there will be recovery against the third-party defendant, and it is sufficient that pleadings show possibility of recovery.21 In determining the sufficiency of the third-party complaint, the allegations in the original complaint and the third-party complaint must be examined.22 A third-party complaint must allege facts which prima facie show that the defendant is entitled to contribution, indemnity, subrogation or other relief from the third-party defendant.23 It bears stressing that common liability is the very essence for contribution. Contribution is a payment made by each, or by any of several having a common liability of his share in the damage suffered or in the money necessarily paid by one of the parties in behalf of the other or others.24 The rule on common liability is fundamental in the action for contribution.25 The test to determine whether the claim for indemnity in a third-party complaint is, whether it arises out of the same transaction on which the plaintiff’s claim is based, or the thirdparty plaintiff’s claim, although arising out of another or different contract or transaction, is connected with the plaintiff’s claim.26 In this case, the claims of the respondent, as plaintiff in the RTC, against the petitioner as defendant therein, arose out of the contracts of lease and sale; such transactions are different and separate from those between Becthel and the petitioner as third-party plaintiff for the construction of the latter’s project in Mauban, Quezon, where the equipment leased from the respondent was used by the petitioner. The controversy between the respondent and the petitioner, on one hand, and that between the petitioner and Becthel, on the other, are thus entirely distinct from each other. There is no showing in the proposed third-party complaint that the respondent knew or approved the use of the leased equipment by the petitioner for the said project in Quezon. Becthel cannot invoke any defense the petitioner had or may have against the claims of the respondent in its complaint, because the petitioner admitted its liabilities to the respondent for the

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amount of P5,075,335.86. The barefaced fact that the petitioner used the equipment it leased from the respondent in connection with its project with Becthel does not provide a substantive basis for the filing of a third-party complaint against the latter. There is no causal connection between the claim of the respondent for the rental and the balance of the purchase price of the equipment and parts sold and leased to the petitioner, and the failure of Becthel to pay the balance of its account to the petitioner after the completion of the project in Quezon.27 We note that in its third-party complaint, the petitioner alleged that Becthel should be ordered to pay the balance of its account of P456,666.67, so that the petitioner could pay the same to the respondent. However, contrary to its earlier plea for the admission of its third-party complaint against Becthel, the petitioner also sought the dismissal of the respondent’s complaint. The amount of P456,666.67 it sought to collect from Becthel would not be remitted to the respondent after all. The rulings of this Court in Allied Banking Corporation and British Airways are not applicable in this case since the factual backdrops in the said cases are different. In Allied Banking Corporation, Joselito Yujuico obtained a loan from General Bank and Trust Company. The Central Bank of the Philippines ordered the liquidation of the Bank. In a Memorandum Agreement between the liquidation of the Bank and Allied Banking Corporation, the latter acquired the receivables from Yujuico. Allied Banking Corporation then sued Yujuico for the collection of his loan, and the latter filed a third-party complaint against the Central Bank, alleging that by reason of its tortious interference with the affairs of the General Bank and Trust Company, he was prevented from performing his obligation under the loan. This Court allowed the third-party complaint based on the claim of the defendant therein, thus:

act. Hence, the Court of Appeals erred when it opined that BA, being the principal, had no cause of action against PAL, its agent or subcontractor. Also, it is worth mentioning that both BA and PAL are members of the International Air Transport Association (IATA), wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship. Therefore, in the instant case, the contractual relationship between BA and PAL is one of agency, the former being the principal, since it was the one which issued the confirmed ticket, and the latter the agent.29 It goes without saying that the denial of the petitioner’s motion with leave to file a third-party complaint against Becthel is without prejudice to its right to file a separate complaint against the latter. Considering that the petitioner admitted its liability for the principal claim of the respondent in its Answer with Third-Party Complaint, the trial court did not err in rendering judgment on the pleadings against it. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the petitioner. SO ORDERED.

… In the words of private respondent, he "[s]eeks to transfer liability for the default imputed against him by the petitioner to the proposed third-party defendants because of their tortious acts which prevented him from performing his obligations." Thus, if at the outset the issue appeared to be a simple maker’s liability on a promissory note, it became complex by the rendition of the aforestated decision.28 In British Airways, the Court allowed the third-party complaint of British Airways against its agent, the Philippine Airlines, on the plaintiff’s complaint regarding his luggage, considering that a contract of carriage was involved. The Court ruled, thus:

Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage. Yet, BA adamantly disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are blaming each other for the incident. In resolving this issue, it is worth observing that the contract of air transportation was exclusively between Mahtani and BA, the latter merely endorsing the Manila to Hongkong leg of the former’s journey to PAL, as its subcontractor or agent. In fact, the fourth paragraph of the "Conditions of Contracts" of the ticket issued by BA to Mahtani confirms that the contract was one of continuous air transportation from Manila to Bombay. "4. xxx carriage to be performed hereunder by several successive carriers is regarded as a single operation." Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani from Manila to Hongkong acted as the agent of BA. Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent

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G.R. No. 152131

April 29, 2009

FLORAIDA TERAÑA, Petitioner, vs. HON. ANTONIO DE SAGUN, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH XIV, NASUGBU, BATANGAS AND ANTONIO B. SIMUANGCO, Respondents. BRION, J.: The petitioner Floraida Terana (petitioner) asks us to reverse and set aside, through this Petition for Review on Certiorari,1 the September 7, 2001 Decision2 of the Court of Appeals (CA), and its subsequent Resolution3 denying the petitioner’s motion for reconsideration.

reach an amicable settlement.19 Instead of filing their position papers, both parties moved for an extension of time to file the necessary pleadings. The trial court denied both motions on the ground that the RSP and the Rules of Court, particularly Rule 70, Section 13(5), prohibit the filing of a motion for extension of time.20 The MTC framed the issues in the case as follows: 1. Whether or not there was a violation of the contract of lease when the old house was demolished and a new house was constructed by the defendant; and 2. Whether or not defendant is entitled to be reimbursed for her expenses in the construction of the new house.21

THE FACTS

THE MTC’S DECISION22

The respondent Antonio Simuangco (respondent) owned a house and lot at 138 J.P. Laurel St., Nasugbu, Batangas, which he leased to the petitioner.4 Sometime in 1996, the petitioner demolished the leased house and erected a new one in its place.5 The respondent alleged that this was done without his consent.6 The Contract of Lease7 defining the respective rights and obligations of the parties contained the following provisions, which the petitioner allegedly violated:

b) To keep the leased property in such repair and condition as it was in the commencement of the Lease with the exception of portions or parts which may be impaired due to reasonable wear and tear;

The MTC rendered its decision on November 5, 199723 despite the parties’ failure to timely file their respective position papers.24 The decision stated that: according to the parties’ Contract of Lease, the consent of the respondent must be obtained before any alteration or repair could be done on the leased property; that the petitioner failed to produce any evidence that the respondent had given her prior permission to demolish the leased house and construct a new one; that even in her answer, she failed to give specific details about the consent given to her; that in demolishing the old structure and constructing the new one, the petitioner violated the Contract of Lease; that this violation of the terms of the lease was a ground for judicial ejectment under Article 1673(3) of the Civil Code; and that since the demolition and construction of the new house was without the consent of the respondent, there was no basis to order the respondent to reimburse the petitioner.

c) xxx

The MTC thus ruled:

d) Not to make any alterations in the Leased property without the knowledge and consent of the Lessor; x x x

IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiff Antonio B. Simuangco and against the defendant Aida Terana as follows:

3. That the lessee obligated herself with the Lessor by virtue of this Lease, to do the following, to wit: a) xxx

The petitioner allegedly also gave the materials from the demolished house to her sister, who built a house adjacent to the respondent’s property.8 When the respondent discovered what the petitioner did, he immediately confronted her and advised her to vacate the premises.9 She refused. On February 3, 1997, the respondent sent a letter demanding the petitioner to vacate the leased property.10 Despite this letter of demand, which the petitioner received on February 10,11 she still refused to vacate the said property. The respondent thus filed a complaint for unlawful detainer12 against the petitioner on April 16, 1997 on the ground of the petitioner’s violation of the terms of the Contract of Lease.13 The respondent prayed for the petitioner’s ejectment of the leased property, and for the award of ₱70,000.00, representing the cost of the materials from the demolished house, attorney’s fees, and costs.14 The presiding judge of the Municipal Trial Court (MTC) of Nasugbu, Batangas, Hon. Herminia Lucas, inhibited from the case on the ground that she is related to the respondent.15 The petitioner denied allegations of the complaint in her "Sagot."16 She claimed that she demolished the old building and built a new one with the knowledge and consent of the respondent; that the original house was old and was on the verge of collapsing;17 that without the timely repairs made by the petitioner, the house’s collapse would have caused the death of the petitioner and her family. The petitioner prayed for the court to: 1) dismiss the ejectment case against her; and 2) award in her favor: a) ₱100,000.00 as moral damages, b) ₱200,000.00 as reimbursement for the expenses incurred in building the new house, c) ₱50,000.00 as attorney’s fees, and d) ₱10,000.00 as costs incurred in relation to the suit.18 The trial court called for a preliminary conference under Section 7 of the Revised Rules of Summary Procedure (RSP) and Section 8 of Rule 70 of the Rules of Court, and required the parties to file their position papers and affidavits of their witnesses after they failed to

1. Ordering the defendant Aida Terana and all persons claiming right under her to vacate and surrender possession of the subject house to the plaintiff; 2. Ordering the said defendant to pay the amount of Five Thousand Pesos (P5,000.00) as Attorney’s fees; and 3. To pay the costs of suit. SO ORDERED.25 Unaware that a decision had already been rendered, the petitioner filed a letter entitled Kahilingan,26 to which she attached her position paper and the affidavits of her witnesses.27 The submission was essentially a motion for reconsideration of the denial of motion for extension of time. On November 6, 1977, the MTC denied the petitioner’s Kahilingan as follows: Defendant Aida Terania’s "KAHILINGAN" dated November 5, 1997 is DENIED for being moot and academic on account of the decision on the merits rendered by this court dated November 4, 1997 relative to the instant case. SO ORDERED.28 Petitioner then filed a Notice of Appeal on November 12, 1997. 29 The records of the case were ordered elevated to the Regional Trial Court (RTC) where the case was docketed as Civil Case No. 439. THE RTC’S DECISION30 The RTC rendered judgment affirming the decision of the MTC on February 26, 1998. The RTC ruled that: 1) the ruling of the MTC was supported by the facts on record; 2) although the respondent failed to submit his position paper and the affidavits of his witnesses, the MTC correctly rendered its decision on the basis of the pleadings submitted

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by the parties, as well as the evidence on record; 3) the petitioner failed to show enough reason to reverse the MTC’s decision. The court further declared that its decision was immediately executory, without prejudice to any appeal the parties may take. The petitioner filed a Motion for Reconsideration and/or for New Trial on March 3, 1998.31 The petitioner argued that the appealed MTC decision was not supported by any evidence, and that the respondent failed to substantiate the allegations of his complaint and to discharge the burden of proving these allegations after the petitioner denied them in her Sagot. In effect, the petitioner argued that the allegations of the complaint should not have been the sole basis for the judgment since she filed an answer and denied the allegations in the complaint; the RTC should have also appreciated her position paper and the affidavit of her witnesses that, although filed late, were nevertheless not expunged from the records. In her motion for a new trial, the petitioner argued that her failure to submit her position paper and the affidavits of her witnesses within the 10-day period was due to excusable negligence. She explained that she incurred delay because of the distance of some of her witnesses’ residence. The petitioner alleged that she had a good and meritorious claim against the respondent, and that aside from her position paper and the affidavits of her witnesses, she would adduce receipts and other pieces of documentary evidence to establish the costs incurred in the demolition of the old house and the construction of the new one.

The RTC denied the motion noting that the petitioner missed the whole point of the reversal of the decision. First, the reversal was made in the interest of substantial justice and the RTC hewed more to the "spirit that vivifieth than to the letter that killeth,"34 and that "a lawsuit is best resolved on its full merits, unfettered by the stringent technicalities of procedure." The RTC further emphasized that a remand is not prohibited under the Rules of Court and that Section 6 of Rule 135 allows it: Sec. 6. Means to carry jurisdiction into effect – When by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer, and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any suitable process or mode of proceeding may be adopted which appears conformable to the spirit of said law or rules. Second, Rule 40 governs appeals from the MTC to the RTC. Nowhere in Rule 40 is there a provision similar to Section 6 of Rule 37. Third, Section 6 of Rule 37 contemplates a motion for new trial and for reconsideration filed before a trial court a quo. The RTC in this case was acting as an appellate court; the petitioner’s motion for new trial and reconsideration was directed against the appellate judgment of the RTC, not the original judgment of the trial court.

On April 28, 1998, the RTC granted the motion for reconsideration, and thus reversed its February 26, 1998 judgment, as well as the November 5, 1997 decision of the MTC. It noted that: 1) the MTC rendered its decision before the petitioner was able to file her position paper and the affidavit of her witnesses; 2) the rule on the timeliness of filing pleadings may be relaxed on equitable considerations; and 3) the denial of the petitioner’s motion for reconsideration and/or new trial will result to a miscarriage of justice. Thus, believing that it was equitable to relax the rules on the timeliness of the filing of pleadings, the RTC remanded the case to the MTC for further proceedings, after giving the respondent the opportunity to submit his position paper and the affidavits of his witnesses. The fallo reads:

Fourth, after Republic Act No. 6031 mandated municipal trial courts to record their proceedings, a trial de novo at the appellate level may no longer be conducted. The appellate courts may instead review the evidence and records transmitted to it by the trial court. Since the petitioner is asking the court to review the records of the MTC, inclusive of her position paper and the affidavits of her witnesses, it is also important to give the respondent an opportunity to file his position paper and the affidavits of his witnesses before the MTC renders a judgment. It is the MTC or the trial court that has the jurisdiction to do that.

WHEREFORE, on considerations of equity and substantial justice, and in the light of Section 6, Rule 135 of the Rules of Court, the judgment of this Court dated February 26, 1998, as well as the Decision dated November 4, 1997 of the Lower Court in Civil Case No. 1305, are hereby both set aside. The lower court to which the records were heretofore remanded is hereby ordered to conduct further proceedings in this case, after giving the plaintiff-appellee an opportunity to file his position paper and affidavits of witnesses as required by Section 10, Rule 70, of the 1997 Rules of Civil Procedure. [Underscoring supplied.]

The CA affirmed the RTC in a decision promulgated on September 7, 2001.35 The CA noted that the RTC’s order of remand was not just based on equity and substantial justice, but was also based on law, specifically Section 6 of Rule 135. Thus, the CA ruled that the RTC did not err in remanding the case to the MTC and ordering the conduct of further proceedings after giving the respondent an opportunity to present his position paper and the affidavits of his witnesses. This ruling did not satisfy petitioner, giving way to the present petition.

SO ORDERED. On May 9, 1998, the petitioner challenged the order of remand through another motion for reconsideration.32 The petitioner argued that since the original action for unlawful detainer had already been elevated from the MTC to the RTC, the RSP no longer governed the disposal of the case. Before the RTC, the applicable rule is the Rules of Court, particularly Section 6 of Rule 37, which reads: Sec. 6. Effect of granting of motion for new trial. – If a new trial is granted in accordance with the provisions of this Rule, the original judgment or final order shall be vacated, and the action shall stand for trial de novo; but the recorded evidence taken upon the former trial, in so far as the same is material and competent to establish the issues, shall be used at the new trial without retaking the same. Thus, the RTC should have conducted a trial de novo instead of remanding the case to the MTC. The petitioner further argued that a remand to the court a quo may only be ordered under Section 8, Rule 4033 of the Rules of Court.

THE CA’S DECISION

THE PETITION Before this Court, the petitioner alleges: 1) that the respondent made a request for the petitioner to vacate the subject property because his nearest of kin needed it; 2) that she was only going to vacate the premises if she were reimbursed the actual cost incurred in building the said house;36 3) that the case be decided on the basis of the entire record of the proceedings in the court of origin, including memoranda and briefs submitted by the parties, instead of being remanded to the MTC. In his Comment37 and Memorandum,38 the respondent joins the petitioner’s prayer for a ruling based on the records instead of remanding the case to the MTC. He prays that, as the MTC ruled, the petitioner be ordered to vacate the leased property, and that the petitioner’s claim for reimbursement be denied. The respondent argues that the MTC correctly ruled on the basis of the parties’ pleadings, the stipulation of facts during the preliminary conference, and the records of the proceedings. ISSUES The petitioner submits the following as the issue to be decided:

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[W]hether under the Rules of Summary Procedure, the Regional Trial Court, as well as the Court of Appeals, may order the case remanded to the MTC after the plaintiff, herein respondent, failed to submit evidence in support of his complaint because his Position Paper, affidavit of witnesses and evidence, were not submitted on time and the extension of time to file the same was denied because it is prohibited under the Rules on Summary Procedure.39

The court shall not resort to the foregoing procedure just to gain time for the rendition of the judgment.

which we break down into the following sub-issues: 1) whether a remand is proper; 2) whether the Court should appreciate the petitioner’s position paper and the affidavits of her witnesses; and 3) whether the complaint for unlawful detainer should be dismissed.

That a position paper is not indispensable to the court’s authority to render judgment is further evident from what the RSP provides regarding a preliminary conference: "on the basis of the pleadings and the stipulations and admissions made by the parties, judgment may be rendered without the need for further proceedings, in which event the judgment shall be rendered within 30 days from the issuance of the order."44 Thus, the proceedings may stop at that point, without need for the submission of position papers. In such a case, what would be extant in the record and the bases for the judgment would be the complaint, answer, and the record of the preliminary conference.

THE COURT’S RULING The petition is partly meritorious. Remand Not Necessary We find that a remand of the case to the lower courts is no longer necessary, given the pleadings and submissions filed, and the records of the proceedings below. A remand would delay the overdue resolution of this case (originally filed with the MTC on April 16, 1997), and would run counter to the spirit and intent of the RSP.40 Petitioner’s Position Paper and the Affidavits of Her Witnesses Cannot Be Admitted Should the Court admit the petitioner’s position paper and the affidavits of her witnesses attached to her Kahilingan? The intent and terms of the RSP both speak against the liberality that the petitioner sees. By its express terms, the purpose of the RSP is to "achieve an expeditious and inexpensive determination" of the cases they cover, among them, forcible entry and unlawful detainer cases.41 To achieve this objective, the RSP expressly prohibit certain motions and pleadings that could cause delay, among them, a motion for extension of time to file pleadings, affidavits or any other paper. If the extension for the filing of these submissions cannot be allowed, we believe it illogical and incongruous to admit a pleading that is already filed late. Effectively, we would then allow indirectly what we prohibit to be done directly. It is for this reason that in Don Tino Realty Development Corporation v. Florentino,42 albeit on the issue of late filing of an answer in a summary proceeding, we stated that "[t]o admit a late answer is to put a premium on dilatory measures, the very mischief that the rules seek to redress." The strict adherence to the reglementary period prescribed by the RSP is due to the essence and purpose of these rules. The law looks with compassion upon a party who has been illegally dispossessed of his property. Due to the urgency presented by this situation, the RSP provides for an expeditious and inexpensive means of reinstating the rightful possessor to the enjoyment of the subject property.43 This fulfills the need to resolve the ejectment case quickly. Thus, we cannot reward the petitioner’s late filing of her position paper and the affidavits of her witnesses by admitting them now. The failure of one party to submit his position paper does not bar at all the MTC from issuing a judgment on the ejectment complaint. Section 10 of the RSP states: Section 10. Rendition of judgment. – Within thirty (30) days after receipt of the last affidavits and position papers, or the expiration of the period for filing the same, the court shall render judgment. [Underscoring supplied.] However, should the court find it necessary to clarify certain material facts, it may, during the said period, issue an order specifying the matters to be clarified, and require the parties to submit affidavits or other evidence on the said matters within ten (10) days from receipt of said order. Judgment shall be rendered within fifteen (15) days after the receipt of the last affidavit or the expiration of the period for filing the same.

Thus, the situation obtaining in the present case has been duly provided for by the Rules; it was correct to render a judgment, as the MTC did, after one party failed to file their position paper and supporting affidavits.

Unlawful detainer The special civil action for unlawful detainer has the following essential requisites: 1) the fact of lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessor's right to hold possession; 3) withholding by the lessee of possession of the land or building after the expiration or termination of the right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the premises; and 5) the filing of the action within one year from the date of the last demand received by the defendant.45 Requisites 1, 4, and 5 have been duly established. The presence of the Contract of Lease is undisputed; the letter of demand was sent on February 3, 1997, and received by the petitioner on February 10, 1997; and the action was filed on April 16, 1997, well within the oneyear period from the letter of demand. For our determination is whether the petitioner’s right to possess the subject property may be terminated by virtue of her violation of the terms of the contract. If we answer in the affirmative, her continued detention of the property is illegal. Section 1673(3) of the Civil Code answers this question by providing that the lessor may terminate the lease contract for violation of any of the conditions or terms agreed upon,46 and may judicially eject the lessee.47 One of the stipulated terms of the parties’ Contract of Lease, as narrated above, is that no alterations may be made on the leased property without the knowledge and consent of the lessor. The issue in this case is beyond the fact of alteration since it is not disputed that the petitioner demolished the house under lease and built a new one. The crucial issue is whether the demolition was with or without the knowledge and consent of the respondent. The petitioner contends that the Court should not give credence to the respondent’s claim that he neither had knowledge of nor gave his consent to her acts. She argued that the respondent had the burden of proving this allegation with positive evidence after she frontally denied it in her answer. Since the respondent failed to discharge this burden, she argues that she no longer needed to prove her defense that the demolition and construction were done with the respondent’s knowledge and consent.48 The petitioner’s contention is misplaced. First, the material allegations in a complaint must be specifically denied by the defendant in his answer. Section 10, Rule 8 of the 1997 Rules of Court, provides:

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A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.

may have suffered but which have no direct relation to his loss of material possession.

Section 11, Rule 8 of the Rules of Court likewise provides that material allegations in the complaint which are not specifically denied, other than the amount of unliquidated damages, are deemed admitted. A denial made without setting forth the substance of the matters relied upon in support of the denial, even when to do so is practicable, does not amount to a specific denial.49

Section 5. Joinder of causes of action. – A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions:

An action for reimbursement or for recovery of damages may not be properly joined with the action for ejectment. The former is an ordinary civil action requiring a full-blown trial, while an action for unlawful detainer is a special civil action which requires a summary procedure. The joinder of the two actions is specifically enjoined by Section 5 of Rule 2 of the Rules of Court, which provides:

(a) The party joining the causes of action shall comply with the rules on joinder of parties;

The petitioner’s denial in her answer consists of the following: 1. Maliban sa personal na katangian at tirahan ng nasasakdal, ay walang katotuhanan ang mga isinasakdal ng nagsasakdal; 2. Na hindi lumabag sa kasunduan ng upahan ang nasasakdal; 3. Na, ang pagpapagawa ng bahay na inuupahan ng nasasakdal ay sa kaalaman at kapahintulutan ng nagsasakdal at higit na gumanda at tumibay ang bahay ng nagsasakdal sa pamamagitan ng pagpapagawa ng nasasakdal; xxx50 We do not find this denial to be specific as the petitioner failed to set forth the substance of the matters in which she relied upon to support her denial. The petitioner merely alleged that consent was given; how and why, she did not say. If indeed consent were given, it would have been easy to fill in the details. She could have stated in her pleadings that she verbally informed the respondent of the need for the repairs, or wrote him a letter. She could have stated his response, and how it was conveyed, whether verbally or in writing. She could have stated when the consent was solicited and procured. These, she failed to do. Ergo, the petitioner is deemed to have admitted the material allegations in the complaint.

(b) The joinder shall not include special civil actions or actions governed by special rules; (c) Where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein; and (d) Where the claims in all the causes of action are principally for recovery of money, the aggregate amount claimed shall be the test of jurisdiction. [Underscoring supplied.] WHEREFORE, the petition is PARTIALLY GRANTED. The decision of the Court of Appeals in CA-G.R. No. SP-48534 is REVERSED AND SET ASIDE. The petitioner FLORAIDA TERANA and all persons claiming right under her are ordered to vacate and surrender possession of the subject property to the respondent ANTONIO SIMUANGCO. No costs. SO ORDERED.

Second, both parties failed to present evidence other than the allegations in their pleadings. Thus, the court may weigh the parties’ allegations against each other. The petitioner presented a general denial, while the respondent set forth an affirmative assertion. This Court has time and again said that a general denial cannot be given more weight than an affirmative assertion.51 Damages recoverable in an unlawful detainer action are limited to rentals or reasonable compensation for the use of the property This Court has no jurisdiction to award the reimbursement prayed for by both parties. Both parties seek damages other than rentals or reasonable compensation for the use of the property, which are the only forms of damages that may be recovered in an unlawful detainer case.52 Rule 70, Section 17 of the Rules of Court authorizes the trial court to order the award of an amount representing arrears of rent or reasonable compensation for the use and occupation of the premises if it finds that the allegations of the complaint are true.531avvphil.zw+ The rationale for limiting the kind of damages recoverable in an unlawful detainer case was explained in Araos v. Court of Appeals,54 wherein the Court held that: The rule is settled that in forcible entry or unlawful detainer cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the leased property. The reason for this is that in such cases, the only issue raised in ejectment cases is that of rightful possession; hence, the damages which could be recovered are those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of the property, and not the damages which he

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