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G.R. No. 175989 - GOVERNMENT SERVICE INSURANCE SYSTEM v. MARIANO A. NOCOM

G.R. No. 175989 - GOVERNMENT SERVICE INSURANCE SYSTEM v. MARIANO A. NOCOM

PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. NO. 175989 : February 4, 2008]

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner, v. MARIANO A. NOCOM, Respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us is a Petition for Review on Certiorari seeking to reverse the Decision1 of the Court of Appeals (Eleventh Division) promulgated on October 2, 2006 in CA-G.R. SP No. 87698.

The instant case is inextricably linked with two earlier consolidated cases filed with this Court - G.R. No. 137448 (GSIS v. Bengson Commercial Buildings, Inc.) and G.R. No. 141454 (GSIS v. Court of Appeals). Both were decided by the Court en banc on January 31, 2002.2 Accordingly, we adopt the factual findings in these cases.

Bengson Commercial Buildings, Inc. (BENGSON) obtained loans from the Government Service Insurance System (GSIS), herein petitioner, on August 20, 1965 and November 23, 1971 in the amounts of P1.25 million and P3 million, respectively, or in the aggregate sum of P4.25 million. As security for the payment of these loans, BENGSON executed real estate and chattel mortgages in favor of the GSIS. For BENGSON's failure to settle its arrearages despite due notices, the mortgages were extrajudicially foreclosed. Its properties then were sold at public auction to the highest bidder, the GSIS itself. A certificate of sale and new certificates of title were thereafter issued in its name.

On June 23, 1977, BENGSON filed with the then Court of First of Instance of San Fernando, La Union an action for annulment of the auction sale, docketed as Civil Case No. 2794. Later on, the case was transferred to the Regional Trial Court (RTC), Branch 20, also in San Fernando, La Union. After hearing, it rendered a Decision (1) nullifying the auction sale of BENGSON's mortgaged properties; (2) ordering the cancellation of the titles issued to the GSIS and the issuance of new ones in the name of BENGSON; (3) ordering BENGSON to pay the GSIS P900,000 for the debenture bonds; and (4) ordering GSIS to (a) restore to BENGSON full possession of the foreclosed properties; (b) restructure the P4.25 million loans with legal rate of interest from the finality of the judgment; (c) pay BENGSON P1.9 million representing accrued monthly rentals and P20,000 monthly rental until the properties are restored to BENGSON's possession, and (d) pay the costs of the suit.

On appeal, docketed as CA-G.R. CV No. 09361, the Court of Appeals rendered its Decision affirming the RTC judgment with modification. The appellate court ordered the remand of the case to the trial court for reception of evidence to determine the costs of suit. On February 10, 1988, the Decision of the Court of Appeals became final and executory.

On April 6, 1995, the trial court issued an Order awarding BENGSON P31 million as costs of suit. While Atty. Rogelio Terrado, counsel for GSIS, received a copy of the Order on the same date, however, he did not file a motion for reconsideration. It turned out that he was absent without official leave since April 6, 1995. Hence, the Order became final and executory. Eventually, BENGSON's ex parte motion for the issuance of a writ of execution was granted by the trial court.

On May 4, 1995, the GSIS received a copy of the Order of execution. Hence, on May 15, 1995, the GSIS, through its corporate counsel, Atty. Oscar Garcia, filed with the trial court an urgent omnibus motion. Attached thereto was an affidavit of merit executed by Margarito C. Recto, manager of the GSIS Legal Services Group, praying that the motion should be considered as a petition for relief from the April 6, 1995 Order and that Atty. Terrado's gross negligence should not bind the GSIS, for to do so would result in the deprivation of its properties without due process.

On January 16, 1997, the trial court issued an Order denying the GSIS's urgent omnibus motion on the ground, among others, that the questioned Order of April 6, 1995 has attained finality. The GSIS received a copy of the Order on February 4, 1997.

On February 16, 1997, the GSIS filed a motion for reconsideration but the trial court denied the same, prompting the GSIS to file, on June 11, 1998, a Petition for Certiorariwith the Court of Appeals, docketed as CA-G.R. SP No. 47669.

However, on November 24, 1998, the Court of Appeals dismissed the petition for the following reasons: (1) the petition was filed out of time; (2) the Verification and Certification of Non-Forum Shopping were not signed by an authorized officer of the GSIS; (3) no copy of the questioned writ of execution dated April 24, 1995 was attached to the petition; (4) the copy of the Order dated January 16, 1997 is not a certified true copy; (5) petitioner did not rebut BENGSON's evidence; and (6) the assailed Order of April 6, 1995 has become final and executory.

The GSIS filed a motion for reconsideration, but this was denied by the Court of Appeals in a Resolution dated January 29, 1999. The GSIS then filed a Petition for Review on Certiorariwith the Supreme Court, docketed as G.R. No. 137448.

Meanwhile, on December 16, 1998, the trial court issued an Order directing the issuance of an alias writ of execution for the satisfaction of the award of P31 million representing the costs of suit awarded to BENGSON in its Order of April 6, 1995. The sheriff then garnished the 6.2 million Class "A" shares of stock of San Miguel Corporation owned by the GSIS. They were sold at public auction, with BENGSON as the sole bidder.

The GSIS filed a motion for reconsideration with motion to quash the alias writ of execution, but this was denied by the trial court on January 8, 1999. Hence, the GSIS filed with the Supreme Court a Petition for Certioraridocketed as G.R. No. 136874, seeking to annul both the December 16, 1998 and January 8, 1999 Orders of the trial court directing the execution of its April 6, 1995 Order and the issuance of the corresponding writ of execution.

On January 21, 1999, this Court issued a Temporary Restraining Order (TRO) enjoining the implementation of the April 6, 1995 Order (directing the transfer, registration, or issuance of new certificates of stock in the name of BENGSON). Thereafter, this Court referred the Petition for Certiorariin G.R. No. 136874 to the Court of Appeals for adjudication. It was then re-docketed as CA-G.R. SP No. 51131.

In its Decision on January 14, 2000, the trial court dismissed the petition of the GSIS in CA-G.R. SP No. 51131. Consequently, the GSIS filed with this Court a Petition for Certiorari with very urgent motion for the issuance of preliminary injunction and/or TRO, docketed as G.R. No. 141454. Forthwith, this case was consolidated with G.R. No. 137448.

On January 31, 2002, the Supreme Court rendered a Decision in G.R. NOS. 137448 and 141454, granting the petitions. This Court held:

Similarly, in the higher interest of justice and equity, and the ground for relief from the 6 April 1995 Order of the trial court being evident, we shall reverse and set aside the 24 November 1998 and 8 January 1999 Resolutions of the Court of Appeals, as well as the 16 January 1997 Decision and 23 April 1998 Order of the trial court. We shall then remand the case to the trial court, and pursuant to Section 6 of Rule 38 of the 1997 Rules of Civil Procedure the case shall stand as if the 6 April 1995 Order has never been issued. Thereafter, the court shall proceed to hear and determine the case as if a timely motion for a newtrial or reconsideration has been granted by it.

The dispositive portion of the decision reads:

WHEREFORE, the petitions at bar are GRANTED. The Resolutions of the Court of Appeals dated 24 November 1998, 8 January 1999, and 14 January 2000, as well as the 16 January 1997 and 23 April 1998 Orders of the Regional Trial Court, Branch 26, San Fernando, La Union, are hereby REVERSED and SET ASIDE. The cases are hereby ordered remanded to the trial court, which shall then proceed to hear and determine the case as if a timely motion for a new trial or reconsideration has been granted by it. Since the issues raised in CA-G.R. SP No. 51131 are irretrievably linked with, or are but a consequence of the 6 April 1995 Order of the trial court, the said case shall be suspended or held in abeyance until after the aforementioned proceedings in the trial court shall have been finally resolved. The Temporary Restraining Order we issued on 7 February 2000 shall remain in effect until further orders from this court.

SO ORDERED.

The records were eventually remanded to the trial court for hearing to determine the merits of the case.

On March 19, 2004, in the course of the proceedings, Mariano A. Nocom, respondent herein, filed a motion for intervention. Attached thereto is his Complaint-in-Intervention.

The GSIS filed its opposition, but in an Order dated June 14, 2004, the trial court denied the same and admitted the Complaint-in-Intervention.

The GSIS then filed a motion for reconsideration, but it was denied in an Order dated September 8, 2004.

On October 27, 2004, the trial court rendered a Partial Decision, the dispositive portion of which reads:

WHEREFORE, and in view of all the foregoing, the Order of this Court dated April 06, 1995, awarding the amount of THIRTY-ONE MILLION PESOS (P31,000,000.00) as costs of suit to plaintiff is hereby reinstated. Considering, however, that the garnished SIX POINT TWO (6.2) MILLION Class "A" SMC shares of defendant GSIS had already been sold to plaintiff at public auction for the satisfaction of the Alias Writ of Execution by virtue of the above-mentioned Order, the awarded costs of suit is hereby declared paid and satisfied.

In view thereof, let an Entry of Satisfaction of Judgment under Section 44 of Rule 39 of the Revised Rules of Court be entered in the record of the case.

SO ORDERED.

The GSIS moved for reconsideration, but it was denied by the trial court. The GSIS then interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No. 8462. This case is still pending resolution.

Meanwhile, on November 23, 2004, the GSIS filed a Petition for Certiorari and prohibition with the Court of Appeals, docketed as CA-G.R. SP No. 87698, contending that the trial court gravely abused its discretion in allowing respondent Nocom to intervene. However, the Court of Appeals denied the petition in its Resolution of October 2, 2006.

Hence, the instant petition anchored on the sole issue of whether the Court of Appeals erred in holding that respondent has a right to intervene.

Intervention is "a proceeding in a suit or action by which a third person is permitted by the court to make himself a party, either joining plaintiff in claiming what is sought by the complaint, or uniting with defendant in resisting the claims of plaintiff, or demanding something adversely to both of them; the act or proceeding by which a third person becomes a party in a suit pending between others; the admission, by leave of court, of a person not an original party to pending legal proceedings, by which such person becomes a party thereto for the protection of some right of interest, alleged by him to be affected by such proceedings."3

Section 1, Rule 19 of the 1997 Rules of Civil Procedure, as amended, provides for the parameters before a person, not a party to a case, can intervene, thus:

SEC. 1. Who may intervene. - A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof, may with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding.

In Alfelor v. Halasan,4 we held that an intervention is valid when a person has: (1) a legal interest in the matter in litigation; (2) or in the success of any of the parties; (3) or an interest against the parties; (4) or when he is so situated as to be adversely affected by a distribution or disposition of property in the custody of the court or an officer thereof.

In Perez v. Court of Appeals,5 this Court ruled that the legal interest which entitles a person to intervene must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by direct legal operation and effect of judgment.

In the instant case, records show that BENGSON transferred and assigned 2,406,666 SMC Class "A" shares to respondent, as evidenced by their Memorandum of Agreement and Deed of Assignment executed on August 24, 1999. We recall that these shares of stock in question were sold to BENGSON to satisfy the costs of suit awarded to it by the trial court in its April 6, 1995 Order. Clearly, respondent has an interest in the outcome of the case before the trial court. The Court of Appeals, therefore, did not err in ruling that respondent's motion for intervention is in order.

WHEREFORE, we DENY the petition. The Decision of the Court of Appeals (Eleventh Division) promulgated on October 2, 2006 in CA-G.R. SP No. 87698 is AFFIRMED. Costs against the petitioner.

SO ORDERED.

Puno, C.J., Chairperson, Corona, Azcuna, Leonardo-de Castro, JJ., concur.

Endnotes:


1 Rollo, pp. 59-74. Per Associate Justice Jose Catral Mendoza and concurred in by Associate Justice Elvi John S. Asuncion (left the service) and Associate Justice Sesinando E. Villon.

2 Reported in 375 SCRA 431 (2002). The opinion of the Court was written by then Chief Justice Hilario G. Davide, Jr.

3 Metropolitan Bank & Trust Co. v. Presiding Judge, RTC, Manila, Br. 39, G.R. No. 89909, September 21, 1990, 189 SCRA 820.

4 G.R. No. 165987, March 31, 2006, 486 SCRA 451.

5 G.R. No. 162580, January 27, 2006, 480 SCRA 411.

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