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G.R. No.

107824 July 5, 1996

MUTUAL FUND, respondents.


The question in this case is the propriety of filing a Supplemental Complaint in order to seek a different relief in view of developments rendering the original relief
impossible of attainment.

The facts are as follows:

On November 8, 1989, petitioner Superclean Services filed with the Regional Trial Court of Manila a complaint
for Mandamus/Certiorari with Preliminary Injunction And/Or Restraining Order against private respondent Home
Development and Mutual Fund. Petitioner alleged that at the public bidding for janitorial services for the year 1990 it
was the "lowest or best bidder," but private respondent refused without just cause to award the contract to it and
instead caused the publication on October 23, 1989 of a Notice of Rebidding to be held on November 9, 1989.

In its answer private respondent defended its action on the ground that not a single bid submitted complied with the
terms and conditions agreed upon in the pre-bidding conference held on September 6, 1989.

The trial court thereafter set petitioner's application for preliminary injunction for hearing and in the meantime
ordered private respondent to desist from conducting a rebidding. At the same time, the court granted leave to
private respondent on January 4, 1990 to hire janitorial services on a month-to-month basis to insure the
maintenance of its offices.

On July 24, 1991, petitioner moved for the admission of a "Supplemental Complaint."1 Petitioner alleged that
because the contract of services was for the furnishing of janitorial service for the previous year 1990, the delay in
the decision of the case had rendered the case moot and academic "without [petitioner] obtaining complete relief to
redress the wrong committed against it by [private respondent], which relief consists in unrealized profits, exemplary
damages and attorney's fees." Accordingly, instead of pursuing its prayer for a writ of mandamus, petitioner sought
the payment of damages to it.

On August 23, 1991, the trial court denied petitioner's motion, finding "no merit in and no basis supporting it" and set
the continuation of the trial on September 19, 1991.

Petitioner filed a motion for reconsideration, but its motion was likewise denied. In its order dated November 25,
1991, the trial court said that admission of the "Supplemental Complaint" would "not only radically but substantially
[change] the issues" by "materially var[ying] the grounds of relief, and would operate unjustly to the prejudice of the
rights of [private respondent]."

Petitioner filed a petition for certiorari in the Court of Appeals which, on August 5, 1992, rendered a decision, finding
no grave abuse of discretion to have been committed by the trial court in not admitting petitioner's "Supplemental
Complaint" and denying the motion for reconsideration of its order. Its ruling was based on the fact that the relief
sought in the "Supplemental Complaint" was different from that contained in the original complaint which sought to
compel private respondent to recognize petitioner as the lowest qualifying bidder. In addition, the appellate court
held that the original complaint had been rendered moot and academic by supervening events and that a
supplemental complaint was inappropriate since "supplemental pleadings are meant to supply the deficiency in aid
of the original pleading, not to entirely substitute the latter."

Petitioner moved for a reconsideration, but its motion was denied in a resolution of the Court of Appeals dated
October 30, 1992. Hence, this petition for review on certiorari.

First. The "Supplemental Complaint" appears to have been filed under Rule 10 of the Rules of Court which provides:

§6 Matters Subject of Supplemental Pleadings. -- Upon motion of a party the court may, upon
reasonable notice and upon such terms as are just, permit him to serve a supplemental pleading
setting forth transactions, occurrence or events which have happened since the date of the pleading
sought to be supplemented. If the court deems it advisable that the adverse party should plead
thereto, it shall so order, specifying the time therefor.

The transaction, occurrence or event happening since the filing of the pleading, which is sought to be supplemented,
must be pleaded in aid of a party's right or defense as the case may be.2 But in the case at bar, the supervening
event is not invoked for that purpose but to justify the new relief sought.

To begin with, what was alleged as a supervening event causing damage to petitioner was the fact that the year for
which the contract should have been made had passed without the resolution of the case. Only incidentally was it
claimed that because of the award of a contract for janitorial services, on a month-to-month basis to a third party,
petitioner failed to realize profits. In its "Supplemental Complaint" petitioner alleged:

1. Supervening events not attributable to anybody which consist in the delay in the early disposition
of the case within the one (1) year period life span of the contract for janitorial services, have
rendered the case moot and academic, without plaintiff obtaining complete relief to redress the
wrong committed against it by defendant, which is the unjustified and/or unlawful refusal of
defendant to recognize plaintiff as the lowest qualifying bidder for janitorial services for the
year 1990;

2. By reason of the unjustified refusal of defendant to recognize the result of the public bidding held
in September 1989 and to award to plaintiff the contract for janitorial services as the lowest
qualifying bidder favorable and advantageous to the defendant for the year 1990, and by hiring
another entity to perform janitorial services during the pendency of the suit, plaintiff suffered
unrealized profits in the sum of P158,117.28;

The supervening event was therefore cited not to reinforce or aid the original demand, which was for the execution
of a contract in petitioner's favor, but to say that, precisely because of it, petitioner's demand could no longer be
enforced, thus justifying petitioner in changing the relief sought to one for recovery of damages. This being the case,
petitioner's remedy was not to supplement, but rather to amend its complaint.

Indeed the new relief sought (payment of damages in lieu of an award of the contract for janitorial services) is
actually an alternative remedy to which petitioner was entitled even before at the time of the filing of its original
complaint. If petitioner was entitled to the award of the contract, as it claimed it was, it could have asked either for an
award of the contract for janitorial services or for damages. The fact that it opted for the first does not preclude it
from subsequently claiming damages because through no fault of its own, the year passed without an award in its
favor, with the result that it could no longer demand the execution of a contract in its favor after that year.

Be that as it may, the so-called Supplemental Complaint filed by petitioner should simply be treated as embodying
amendments to the original complaint or petitioner may be required to file an amended complaint.

Second. But, it is contended, such an amendment of the complaint would change the theory of the case. Three
reasons were cited by the Court of Appeals why it thought the trial court correctly refused to admit the so-called
Supplemental Complaint of petitioner: (1) change in the reliefs prayed for; (2) change in the issues of the case; and
(3) prejudice to the rights of private respondent.

The contention has no merit. An amendment to change the relief sought does not change the theory of a case. What
is prohibited is a change in the cause of action. Thus in Arches v. Villarruz,3 it was held:

The lower court denied the admission of the amended complaint on the ground that the plaintiff
therein has changed the action alleged in the original complaint, but upon comparing the two
complaints, we find that, essentially, there was no change of action for, in both the original and the
amended complaints, the action was for the collection of the value of the same promissory notes and
the only difference between the original and the amended complaints is with regard to the
consideration of said promissory notes, for while in the original complaint it was alleged that these
were executed by defendant Villarruz for money obtained from plaintiff Arches and with which the
former paid for labor and materials for the construction and completion of the Ivisan Bridge, in the
amended complaint it was alleged that said promissory notes were executed for materials supplied
to William Villarruz and actually used in the construction of the Ivisan Bridge. While the rule allowing
amendments to a pleading is subject to the general limitation that the cause of action should not be
substantially changed or that the theory of the case should not be altered, in the furtherance of
justice, amendments to a pleading should be favored and the rules thereon should be liberally
construed. In the present case, we find justification for allowing the admission of the amended
complaint in order that the real question between the parties may be properly and justly threshed
out, in a single proceeding, and thus avoid multiplicity of actions.

In Vda. de Villaruel v. Manila Motor Co., Inc.,4 plaintiffs, as lessors of a property, filed an action for the rescission of
the contract of lease for alleged refusal of defendants to pay rentals. While the case was pending, the buildings
leased were destroyed by fire. Plaintiffs filed a supplemental complaint for the recovery of the value of the burned
buildings. In holding the supplemental complaint proper, this Court held:

This action was inceptionally instituted for the rescission of the contract of lease and for the recovery
of unpaid rentals before and after liberation. When the leased buildings were destroyed, the
plaintiffs-lessors demanded from the defendants-lessees, instead, the value of the burned premises,
basing their right to do so on defendants' alleged default in the payment of post-liberation rentals
(which was also their basis in formerly seeking for rescission). This cannot be considered as already
altering the theory of the case which is merely a change in the relief prayed for, brought about by
circumstances occurring during the pendency of the action, and is not improper. (Southern Pacific
Co. vs. Conway, 115 F. 2d 746; Suburban Improvement Company vs. Scott Lumber Co., 87 A.L.R.
555, 59 F. 2d 711). The filing of the supplemental complaint can well be justified also under Section
2, Rule 17 of the Rules of Court (on amendments) "to the end that the real matter in dispute and all
matters in the action in dispute between the parties may, as far as possible be completely
determined in a single proceeding". It is to be noted furthermore, that the admission or rejection of
this kind of pleadings is within the sound discretion of the court that will not be disturbed on appeal in
the absence of abuse thereof (see Sec. 5, Rule 17, Rules of Court), especially so, as in this case,
where no substantial procedural prejudice is caused to the adverse party.5

In this case, the original complaint for Mandamus/Certiorari With Preliminary Injunction And/Or Restraining Order
alleged, as cause of action, private respondent's unjustifiable refusal to award the contract to petitioner despite the
fact that the latter was the "lowest and best qualifying bidder." On the basis of this allegation, it was prayed that:

1. Upon filing [of] this Complaint, a restraining order be issued to enjoin [private respondent] from
implementing [or] proceeding with its Notice of Rebidding which is scheduled on November 9, 1989
at 10:00 A.M.;

2. After trial on the merits, judgment be rendered —

a. ordering [private respondent] to recognize [petitioner] as the lowest qualifying

responsive bidder at the public bidding held on September 22, 1989 and therefore its
right to the award of the contract for janitorial services;

b. declaring that [private respondent] in publishing its "Notice of Rebidding" acted

with grave abuse of discretion amounting to excess and/or lack of jurisdiction;

c. declaring the restraining order or temporary writ of injunction to be permanent; and

d. for costs of suit.

These same allegations constitute petitioner's cause of action for damages, to wit:

1. the sum of P158,117.28 as unrealized profits;

2. the sum of P50,000.00 as exemplary damages;

3. the sum equivalent to twenty-five (25%) percent of the total amount due and demandable, plus
P1,000.00 for every appearance of counsel in court;

4. the costs of suit.

As already stated, the change in the relief sought was necessitated by a supervening event which rendered the first
relief sought impossible of attainment.

Because the cause of action on which the complaint for mandamus and injunction and the so-called Supplemental
Complaint are based is one and the same, the issue raised is the same, namely, whether private respondent was
justified in refusing to award the contract for janitorial services to petitioner.

Nor would admission of the amended complaint prejudice the rights of private respondent as defendant in the action
below, as the Court of Appeals held. Indeed neither the trial court nor the appellate court showed in what way the
rights of private respondent would be prejudiced by the allowance of the amendment in question. There will be no
unfairness or surprise to private respondent, because after all private respondent will have a right to file an amended
answer and present evidence in support thereof.6

Third. The Court of Appeals also held that the action for mandamus and/or injunction had become moot and
academic and consequently there was no longer any complaint to be supplemented. It is true that a supplemental or
an amended pleading presupposes the existence of a pleading. What was rendered moot and academic, however,
was not petitioner's cause of action but only its prayer for the writ of mandamus. There was still an alternative
remedy left to petitioner of seeking damages in lieu of an award of the contract. The situation is similar to an action
for illegal dismissal in labor law. If reinstatement is no longer possible, because the position has been abolished and
there is no way the dismissed employee can be reinstated to a comparable position, the employee's action is not
thereby rendered moot and academic. He can instead ask for separation pay.

Indeed, what is important is that, as already stated, the basic allegations of fact in the original and in the amended
complaints are the same, namely, that private respondent, without justification, refused to award the contract of
services to petitioner. Through no fault of petitioner, the year for which janitorial services were to be rendered
expired without the resolution of petitioner's case. It would be to exalt technicality over substance to require that
petitioner file a new complaint. It would best serve the interests of justice if the so-called Supplemental Complaint is
simply considered as embodying amendments to the original complaint. In fact it appears that the court ordered a
continuation of the trial on September 19, 1991, despite petitioner's statement in its Supplemental Complaint that
the original case had become moot and academic.

WHEREFORE, the decision of the Court of Appeals is REVERSED and the case is REMANDED to the trial court
with instructions to admit the "Supplemental Complaint" and to treat it as an amendment to the original complaint or
to require petitioner to file an amended complaint, merging the relevant allegations of its original complaint and
"Supplemental Complaint," and thereafter to allow private respondent to file an answer.


G.R. No. L-40491 May 28, 1975

SEGUNDO AMANTE, petitioner, vs. HON. DELFIN VIR. SUNGA, in his capacity as Presiding Judge of the
Court of First Instance of Camarines Sur, Branch No. I, and VIGAAN AGRICULTURAL DEVELOPMENT
CORPORATION, respondents.

ANTONIO, J.: ñ é+.£ªwp h!1

This case raises in issue the validity of the Order dated February 14, 1975 of respondent Judge of the Court of First
Instance of Camarines Sur, Branch I, setting aside its Order of December 6, 1974, granting petitioner an extension
of fifteen (15) days from December 9, 1974 within which to file his answer to the complaint in Civil Case No. 7799
(Vigaan Agricultural Development Corporation vs. Segundo Amante) and declaring the petitioner in default,
notwithstanding the fact that said party had already filed his answer.
It appears that the petitioner, on December 2, 1974, filed a written motion with the trial court requesting for an
extension of fifteen (15) days from December 9, 1974, within which to file his answer. Although it is not disputed that
a copy of said motion was furnished the counsel for the plaintiff, the said pleading appears to have been addressed
only to the Clerk of Court, with the request that said official submit the motion to the Court for its consideration and
resolution immediately upon receipt thereof.

On December 6, 1974, the trial court granted, the motion. Petitioner, however, on December 10, 1974, filed a
"Motion for Bill of Particulars". Copy of this motion was appropriately addressed to the counsel of plaintiff, informing
him that petitioner will submit the said motion to the, court for its consideration and resolution at 8:30 a.m. on
December 23, 1974.

In the meantime, on December 11, 1974, private respondent corporation, as plaintiff in said case, filed a motion to
set aside the trial court's Order of December 6, 1974, alleging that the notice in petitioner's motion of December 2,
1974 was defective for non-compliance with Section 5 of Rule 15 of the Revised Rules of Court, and praying that the
defendant be declared in default.

The aforecited motions of the petitioner and of the corporation were set for hearing on February 7, 1975. On said
date, after the respondent corporation showed to the petitioner its Articles of Incorporation, the latter agreed to
withdraw his Motion for Bill of Particulars, leaving the private respondent's motion for resolution by the Court.

On the same date (February 7, 1975.), petitioner filed his answer with counterclaim to the complaint. The court a
quo, however, on February, 14, 1975, on the basis of its opinion that the notice in the motion of petitioner for the
extension of the period within which to file an answer was defective because of its alleged failure to comply with the
requirements of Section 5 of Rule 15 of the Revised Rules of Court, set aside its Order of December 6, 1974,
declared petitioner in default and authorized the Clerk of Court to receive the evidence of the plaintiff.

In view of the legal issue involved, this Court considered the Comment of respondent corporation as its Answer. As
the matter was already amply discussed in the pleadings, this case was deemed submitted for decision.

We grant certiorari and set aside the trial court's Order of February 14, 1975.

1. The motion for extension of time within which a party may plead is not a litigated motion where notice to the
adverse party is necessary to afford the latter an opportunity to resist the application,1 but an ex parte motion "made
to the court in behalf of one or the other of the parties to the action, in the absence and usually without the
knowledge of the other party or parties."2 As "a general rule, notice of motion is required where a party has a right to
resist the relief sought by the motion and principles of natural justice demand that his rights be not affected without
an opportunity to be heard..."3

It has been said that "ex parte motions are frequently permissible in procedural matters, and also in situations and
under circumstances of emergency; and an exception to a rule requiring notice is sometimes made where notice or
the resulting delay might tend to defeat the objection of the motion."4

Section 1 of Rule 11 of the Revised Rules of Court authorizes the trial court to permit the submission of an answer
even after the time fixed in the rules for its presentation. The granting of extension to plead is a matter addressed to
the sound discretion of the court.5 In some cases the court allowed the defendant to file his answer "even after the
time fixed for their presentation."6

Thus We have set aside orders of default where defendant's failure to answer on time was excusable.7

In the case at bar, respondent private corporation was not deprived of any substantial right by reason of the alleged
defect of notice in petitioner's motion praying for an extension of the time to plead. There are motions that may be
heard and granted ex parte, and a motion for extension of time to file an answer belongs to such class.8 It was,
therefore, error for the court a quo to set aside its Order granting extension to petitioner within which to file his

2. Moreover, petitioner had filed a Motion for Bill of Particulars on December 10, 1974, and under the Rules "after
service of the bill of particulars ... or after denial of his motion, the moving party shall have the same time to serve
his responsive pleading, if any is permitted by these rules, as that to which he was entitled at the time of serving his
motion, but not less than five (5) days in any event." (Section 1 [b], Rule 12, Revised Rules of Court.) The pendency
of the motion for a bill of particulars, therefore, interrupts the period within which to file a responsive pleading, and
movant should have, after notice of the denial of his motion, the same time to serve his answer "as that to which he
was entitled at the time of serving his motion." 9

It is true that petitioner, on February 7, 1975, withdrew his Motion for a Bill of Particulars, but on the same date he also filed his answer.

In the attendant circumstances, We cannot perceive how the interests of justice was served and promoted by the
precipitate action of the trial court. A default judgment does not pretend to be based on the merits of the
controversy. Its existence is justified by expediency. It may, however, amount to a positive and considerable
injustice to the defendant. The possibility of such serious consequences necessarily requires a careful examination
of the circumstances under which a default order was issued. And when no real injury would result to the interests of
the plaintiff by the reopening of the case, the only objection to such action would, therefore, be solely on a
technicality. On such an infirm foundation, it would be a grievous error to sacrifice the substantial rights of a litigant.
For the rules should be liberally construed in order to promote their objective in assisting the parties in obtaining just,
speedy and inexpensive determination of their cases.

WHEREFORE, the default order of February 14, 1975, as well as the Order of March 14, 1975, denying petitioner's
motion for reconsideration, is hereby set aside, and this case is ordered remanded to the court of origin for further
proceedings. Costs against private respondent.

G.R. No. L-27802 October 26, 1968


AL., defendants-appellants.

CENTRAL SURETY & INSURANCE COMPANY, third-party plaintiff-appellant, vs. PO KEE KAM, ET AL., third
party defendants-appellees.


On October 23, 1959 the Republic of the Philippines (hereinafter referred to as the Republic) filed suit against the
Central Surety & Insurance Company (hereinafter referred to as the Surety) and the latter's manager of the bond
department, Casimiro Mangoba. The complaint recites (1) that the Surety executed in favor of the Deportation Board
a bond in the amount of P5,000 for the temporary release of Po Kee Kam, a Chinese citizen and respondent in
deportation proceeding No. 730, subject to certain conditions, principal among which are that the Surety undertakes
to have Po Kee Kam available at all times to the Deportation Board within 24 hours from notice, that Po Kee Kam
shall be personally present before the Deportation Board at all hearings in the case, and that upon his failure to
comply with any of the above conditions, the bond shall be automatically confiscated and forfeited in favor of the
Government; (2) that because Po Kee Kam failed to appear at the hearing scheduled for December 14, 1962
despite due notice to the Surety, the Deportation Board on the same date issued an order for his arrest, which same
order declared the bond confiscated in favor of the Government; (3) that by letter of December 27, 1962, the
Commissioner of Immigration informed the Surety of the forfeiture of the bond and demanded the remittance to the
Bureau of Immigration of the amount of P5,000 on or before January 2, 1963; (4) that notwithstanding repeated
demands the Surety has failed to remit the said amount without justifiable cause. Prayer is made that judgment be
rendered sentencing the Surety and Mangoba to pay, jointly and severally, to the Republic the amount of P5,000,
with interest at the legal rate from the filing of the complaint until full payment, and the sum of P1,000 as attorney's
fees and litigation expenses, plus costs.

On July 5, 1963 the Surety filed its answer, interposing inter alia, the defenses (1) that its bond cannot be made
liable beyond the amount of P5,000; (2) that it is not liable for attorney's fees in the absence of any stipulation to that
effect; (3) that the court has no jurisdiction over the case as the amount involved is only P5,000; and (4) that the
Republic has no cause of action.

Mangoba's answer, filed on July 11, 1963, makes substantially the same averments and interposes the same
defenses as those contained in the Surety's answer. In addition, he disclaims personal liability under the bond.
On July 30, 1963 the Surety filed a third-party complaint, with leave of court, against Po Kee Kam and Tony Go
(hereinafter referred to as the third-party defendants), alleging that the Republic filed a complaint against it on the
basis of a surety bond in the amount of P5,000 issued in behalf of Po Kee Kam in favor of the Deportation Board;
that for and in consideration of the issuance of the said bond, the third-party defendants, jointly and severally,
executed an indemnity agreement in favor of the Surety to indemnify it for damage, loss, costs, payments, advances
and expenses of whatever kind and nature which it might at any time incur as a consequence of having executed
the said bond. Prayer is made that in the event judgment is rendered against it, the third party defendants be
ordered, jointly and severally, to reimburse it whatever amount it may be adjudged to pay to the Republic, plus
interest at the rate of 12% per annum, compounded quarterly, from the filing of the complaint until the whole
obligation is fully paid, 15% of the total amount due as attorney's fees, and costs.

On September 7, 1963 the third-party defendants filed their answer, admitting some material allegations of the third-
party complaint, denying others, and interposing the defense that the case is premature as the main case has not
yet been terminated.

On December 2, 1963 upon verbal motion of the third party defendants, the trial court dismissed the third-party
complaint for lack of jurisdiction, in the following words:

It appearing from the records that the third-party complaint was filed after the passage of the new law conferring
original jurisdiction on the Municipal Court in civil cases involving not more than P10,000.00, and it likewise
appearing that the third-party complaint refers to a claim of only P6,000.00, the oral motion to dismiss filed by the
counsel for the third-party defendants is in order. Therefore, the court hereby order's that the third-party complaint
be, as it is hereby, dismissed, without prejudice to the right of the third-party plaintiff to file a separate case in the
municipal court.

On the following day, December 3, 1963, the trial court rendered judgment, ordering the surety to pay to the
Republic the sum of P5,000, with interest thereon at the legal rate from the date of the filing of the complaint until the
whole amount shall have been paid, plus costs, and absolving Mangoba from the complaint.

The Surety forthwith interposed its appeal to the Court of Appeals from the order of December 2, 1963 dismissing its
third-party complaint, and from the decision of December 3, 1963 ordering it to pay the Republic the amount of
P5,000, contending that the trial court erred in (1) holding the Surety liable on the bond despite the fact that it has
not violated any condition thereof, (2) not declaring itself without jurisdiction over the subject-matter of the action,
and (3) dismissing the third-party complaint. The Court of Appeals certified the case to this Court on May 10, 1967,
pursuant to section 2, Article VIII of the Constitution, and section 17(3) of Republic Act 296, on the ground that the
jurisdiction of the trial court is squarely in issue.

By formulation of the Surety, the issues tendered for resolution in this appeal are: (1) Is the Surety liable on its
bond? (2) Did the trial court have jurisdiction over the subject-matter of the main action? (3) Did the trial court have
jurisdiction over the third-party complaint?

1. Upon the first issue, it is argued that the Surety is not liable on its bond because the two conditions thereof — that
there must be notice to it by the Republic to produce the person bonded, and that the latter fails to appear as
required in the notice — did not come to pass. Hence, the forfeiture of the bond is unwarranted. .

This pretense of the Surety is palpably without merit. Exhibit B1 unequivocally shows that the Surety received notice
to produce the person of Po Kee Kam; in point of fact the Surety even orally moved "for the postponement of the
production of respondent Po Kee Kam," which motion was denied in the order of December 14, 1962 of the
Deportation Board. It would have been pointless to ask for postponement to produce the person of Po Kee Kam, if
the Surety did not receive notice to that effect. At all events, the trial court found that the Surety and Mangoba "were
duly notified to produce the said Po Kee Kam before the Deportation Board on December 14, 1962, but the said Po
Kee Kam failed to appear." This finding of the trial court is entitled to respect, being fully supported by the evidence
of record.2

The trial court therefore did not err in ordering the Surety to pay to the Republic the sum of P5,000, with interest
thereon at the legal rate from the date of the filing of the complaint until full payment thereof, plus costs.
2. Upon the second issue, it is insisted that the trial court had no jurisdiction over the subject-matter of the action
because the total amount involved is only P6,000 (P5,000 under the bond and P1,000 as attorney's fees), a court of
first instance being vested with jurisdiction only over cases in which the demand, exclusive of interest, or the value
of the property in controversy, exceeds P10,000, pursuant to section 44 of Republic Act 296, as amended by
Republic Act 3828 which took effect on June 22, 1963. Although the present action was filed on June 20, 1963, two
days before the effectivity of Republic Act 3828 which broadened the jurisdiction of municipal and city courts to
include cases in which the demand, exclusive of interest, or the value of the property in controversy, does not
exceed P10,000,3 it is nonetheless argued that the court's jurisdiction over the case was lost on June 22, 1963,
when Republic Act 3828 took effect, and therefore the case should have been remanded to the municipal court.4

We disagree. It is not disputed that the trial court acquired jurisdiction over the subject-matter on June 20, 1963
when the complaint was filed with it. It is of no moment that summons was served and that the case was heard and
decided after the effectivity of Republic Act 3828, because the rule is firmly entrenched in our law that jurisdiction
once acquired continues until the case is finally terminated.5

3. Upon the third issue, the Surety takes the position that if the trial court acquired jurisdiction over the main case, "it
follows that it could also take cognizance of the third-party complaint which derives its life from the complaint."

The Surety has a point here. It is true that the third-party complaint was filed after the effectivity date of Republic Act
3828. It is likewise true that the demand therein made does not exceed P10,000, and, therefore, is not within the
jurisdiction of the Court of First Instance if it were an independent action. But the third-party complaint is
an ancillarysuit which depends on the jurisdiction of the court over the main action. Since the trial court had acquired
jurisdiction over the complaint, it necessarily follows that it likewise had jurisdiction over the third-party complaint
which is but an incident thereof. This must be so because jurisdiction over the main case embraces all incidental
matters arising therefrom and connected therewith.6 A contrary rule would result in "split jurisdiction" which is not
favored,7 and in multiplicity of suits, a situation obnoxious to the orderly administration of justice.8 The court acquired
jurisdiction over the third-party complaint, provided it had jurisdiction over the main case, for the reason that the
third-party complaint is but a continuation thereof, its purpose being to seek "contribution, indemnity, subrogation or
any other relief, in respect to his opponent's claim."9 Thus, in Talisay-Silay Milling Co., et al. vs. CIR, et al.,10 this
Court elaborated with incisiveness:

The third-party complaint is but a continuation of the main action, its purpose being merely to seek
"contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim." (Rule 6, See.
12.) The aim is to avoid the actions which should be tried together to save the time and cost of a
reduplication of evidence, to obtain consistent results from identical or similar evidence, and to do away with
the serious handicap to a defendant of a time difference between a judgment against him and a judgment in
his favor against the third party defendant.

Thus it has been held that "where a court has jurisdiction of a claim and the parties in the principal action, it
generally has jurisdiction also of a suit or proceeding which is a continuation of or incidental and ancillary to
the principal action, even though it might not have jurisdiction of the ancillary proceeding if it were an
independent and original action or proceeding. The jurisdiction of the ancillary suit or proceeding is
referrable to or dependent upon the jurisdiction of the court over the principal suit or proceeding."

Petitioners urge that a rule similar to the rule on counterclaim be adopted. But a third-party complaint cannot
be likened to a counterclaim which must be within the jurisdiction of the court trying the main case, because
unlike a third-party complaint, a counterclaim "need not diminish or defeat the recovery sought by the
opposing party, but may claim itself exceeding in amount or different in kind from that sought in the opposing
party's claim" (Rule 6, Sec. 6). A third-party complaint may likewise be likened to a cross claim under Rule 9,
section 5. ... The principle is at once apparent, namely, that where an action is ancillary to a main action
over which a court has jurisdiction, no independent jurisdiction is needed to enable the court to take
cognizance of the ancillary action.

There can therefore be no doubt that in dismissing that Surety's third-party complaint the trial court committed a
reversible error.

4. The Surety prays for the remand of the third-party complaint to the trial court for further proceedings. It is our view
that under the environmental circumstances, there is no need to do so. The third-party defendants did not
specifically deny the execution of the indemnity agreement. They merely expressed insufficient knowledge and
information to form a belief as to the veracity thereof, without setting forth "the substance of the matters" upon which
they rely to support their denial as required by the Rules.11 To obviate further litigation between the Surety and the
third-party defendants, this Court now decides the third-party complaint on the merits, and orders the third-party
defendants to reimburse the Surety the amount of the judgment against it. The pleadings on record fully support this

ACCORDINGLY, the order dated December 2, 1963 dismissing the third-party complaint is set aside; the decision
dated December 3, 1963 is modified in the sense that the third-party defendants are hereby ordered to pay to the
Surety whatever sums the latter will pay to the Republic by virtue of the judgment appealed from. Costs are
assessed against the Surety in favor of the Republic, and against the third-party defendants in favor of the Surety.

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