Civil Procedure Case Digests (Rule 35)
Civil Procedure Case Digests (Rule 35)
Civil Procedure Case Digests (Rule 35)
This is a petition for review of the decision, 1 dated April 18, 1995, of the Court
of Appeals in CA-G.R. No. 34831, affirming the approval by the Regional Trial
Court, Branch 8, Davao City, of the report of a commissioner on the
examination of the accounting records of petitioner.
On August 11, 1992, private respondent sued petitioner for a sum of money
and for damages. In his complaint filed with the Regional Trial Court, Branch
8, Davao City, private respondent alleged, among other things, that according
to the financial report prepared by a certified public accountant commissioned
by him, the logging operations of the joint venture earned an income of
P3,659,710.07 from January to August 1990. 4 Private respondent alleged that
this figure was subsequently confirmed by petitioner's certified public
accountant,5 but despite repeated demands by him for the payment of his 50%
share of the income from the logging operations of their joint venture,
petitioner refused to pay him his share.6
In its answer, petitioner alleged that private respondent's auditor bloated the
joint venture's net operating income for the year 1990 to P3,659,710.07 and
that the correct amount, as found by petitioner's accountant, was only
P2,089,141.80.7 Petitioner alleged that pursuant to a partial liquidation of the
joint venture on August 2, 1990, private respondent received P2,632,719.85
which represents his share in the assets as well as in the net operation income
of the venture. What was left to be liquidated, according to petitioner, were the
disposition of undivided equipment and collection of receivables, payment of
taxes, and adjustment of private respondent's share upon the arrangement on
the value of petitioner's equipment share in the amount of P55,970.32. 8
As an affirmative defense, petitioner averred that taking into account the entire
operation of the joint venture, the amount of the joint venture's undistributed
assets from 1988 to 1990 was only P584,657.63. It claimed that private
respondent had no cause of action against it (petitioner) and that the latter's
claim was based on a fraudulent scheme.9
During the pre-trial conference of the case, the parties agreed to refer the case
to a commissioner. For this reason, Leonora B. Cainglet was appointed
commissioner by the trial court and ordered to conduct an audit of petitioner's
accounting records.10 The commissioner thereafter required the parties to
produce the records of the company, consisting of the joint venture agreement,
books of accounts from the start of the joint venture's operations up to its
liquidation, sales invoices, cash vouchers, journal vouchers, payrolls, and
other documents pertaining to business transactions, monthly bank
statements, used and canceled checks, bank reconciliations, savings
passbooks, if any, financial statements, and statement of joint venture
liquidation.11 The commissioner interviewed petitioner's representative as well
as private respondent, after which she filed her report in court, furnishing
copies of the same to the parties on March 15, 1993.
On March 26, 1993, petitioner filed a Manifestation and Motion, alleging that
there were discrepancies concerning sales, depreciation, and interest between
the audit report and the report of its (petitioner's) auditor. Petitioner asked for
copies of certain cash vouchers, journal vouchers, and checks covering, among
other things, repairs and maintenance, representation, fuel, oil and lubricants,
and freight and handling. It was subsequently allowed to examine the
documents in court.
On May 27, 1993, petitioner filed its comments and objections to the
commissioner's report, praying that the commissioner be directed to identify
the transactions, receipts, or documents which she disallowed, disapproved, or
excluded, covering the abovementioned variances, and be ordered to correct
the errors which she had allegedly committed. 12 The trial court conducted a
total of fourteen (14) hearings from May 29 to September 28, 1993 to clarify the
variances pointed out by petitioner.13
The main issue in this case is whether the order of the trial court, confirming
and adopting the commissioner's report should be set aside on the ground that
the commissioner merely based her report on her interview of the parties and
did not hold any formal hearing.
In dismissing the petition for certiorari and prohibition filed by petitioner, the
Court of Appeals held:
While the procedure laid down by the [Rules of Court] in the conduct of the
auditing process concerning the requirement that the parties and/or their
respective counsels should be summoned by the commissioner for a "first"
meeting, and that the persons who are summoned by the commissioner should
be placed under oath, [was] not done by the court commissioner appointed by
the respondent court, We find and so hold that under Rule 33, Section 3 of the
Rules, the order of reference may specify or limit the powers of the
commissioner, the court can direct the commission[er] to report only upon
particular issues, or to do or perform certain particular acts, or receive
evidence only, or fix the date for the beginning and closing of the hearings.
Thus, the court-appointed commissioner can act and perform the power and
authority only in accordance with, and within the limits of the very order
directly handed down by the court which appointed him. The commissioner is
obliged to work only under those constraints and within specific pre-
determined concerns.
Respondent court's order to Mrs. Cainglet was specific, "to conduct an audit of
defendant's (petitioner's) accounting records." In compliance with, and in
fulfillment of, the order, Mrs. Cainglet required the parties to submit the
relevant documents and papers, after which she examined them and on the
basis of which she prepared and submitted the audit report in the court. With
respondent's court order as frame of reference, we find and so hold that the
court commissioner performed her task within the well-defined order to the
letter. She did not hold any hearing and swore no witnesses for she was not
ordered to do so.19
The Court of Appeals rejected petitioner's assertion that it was not afforded the
opportunity to object to the disallowance or disapproval of certain items in the
computation of the assets of petitioner. It pointed out that, among the persons
who were interviewed by the commissioner, were petitioner's representative,
Pacifico V. Dizon, Jr., and private respondent. Petitioner, therefore, had an
adequate opportunity to inquire about the progress of the audit and challenge
the commissioner's report if there were certain items therein that in its opinion
should be disallowed, disapproved, or excluded. 20
Petitioner's contentions are well taken. Rule 33 of the 1964 Rules of Court,
under which this case was decided below, provides in pertinent part:
These provisions are substantially reproduced in Rule 32, §§3 and 5 of the
present Code of Civil Procedure. The underscored portions of §§3 and 5
indicate quite clearly the necessity for a formal hearing and the swearing of
witnesses; otherwise, the commissioner cannot determine factual questions
which arise in the course of his examination of the accounts. For this purpose,
the witnesses must necessarily be sworn in and offered for cross-examination
by the parties so that the truth of and question may be determined. This would
not be possible were the commissioner merely to interview the parties. Where
controversial questions are involved, such as whether certain items must be
allowed or disallowed, an adversary proceeding is particularly indicated. That is
why the last sentence of §3 says that "The trial or hearing before him shall
proceed in all respects as it would be held before the court." For the fact is that
the commissioner substitutes for the judge, and whatever the judge can or
cannot do, the commissioner also can or cannot do. Consequently, if a judge
cannot decide a question without hearing the parties on oath or affirmation,
neither can the commissioner.
Nor can it be maintained that petitioner waived the right to object to the
proceedings before the commissioner. Because of the lack of a formal hearing,
petitioner was denied the opportunity to object to the procedure followed by the
commissioner as well as to the disallowance by her of certain items in the
computation of the corporation's assets.
Neither can Rule 32, §10 of the 1964 Rules of Court be cited to bar petitioner
from questioning the failure of the commissioner to hold a hearing. This
provision states in pertinent part:
Objections to the report based upon grounds which were available to the
parties during the proceedings before the commissioner, other than objections
to the findings and conclusions therein set forth, shall not be considered by the
court unless they were made before the commissioner.
The objections referred to are those which a party could have made during the
hearings before the commissioner, such as those relating to the admissibility of
evidence. But this presupposes a hearing or a trial, during which the objections
should be made. Otherwise, there would be neither occasion nor opportunity
for making the objections.1âwphi1.nêt
The Court of Appeals held that petitioner raised the question of lack of hearing
before the commissioner only in its motion for reconsideration of the August 1,
1994 order of the trial court. 23 This is not correct. The records show that it
actually did so in the May 28, 1993 hearing conducted by the trial court on the
commissioner's report.24 This was the first time petitioner had an opportunity
to do so since no hearing was held before the commissioner. Moreover, since
the proceedings before the commissioner were null and void because of the
denial of due process to petitioner, the nullity of the proceedings can be raised
at any stage of case. It was error, therefore, for the trial court to approve the
commissioner's report over the objection of petitioner.25
SO ORDERED.
Footnote
4 Rollo, p. 26.
8 Id.
9 Id.
11 Id.
12 Id.
18 Rollo, p. 93.
RESOLUTION
CAGUIOA, J.:
Facts
SO ORDERED.7
On appeal, the DARAB-Central then rendered its Decision reversing the Provincial
Adjudicator and ruling that the DARAB has no juisdiction over the complaint
since it involves an administrative investigation of whether respondent's CLOA
was valid given the claim of petitioners that they were the actual tillers and
occupants of the land for a long period of time. 8 For the DARAB-Central, it was
the Secretary of the DAR that had jurisdiction. 9 The dispositive portion of the
DARAB-Central's Decision states:
SO ORDERED.10
Issues
While it is true that the issuance of the CLOA does not put the
ownership of petitioner beyond attack and scrutiny, respondents
should have done it in a separate action for that purpose. As held in a
plethora of cases, the issue of the validity of title, i.e., whether or not
it was fraudulently issued, can only be raised in an action expressly
instituted for that purpose. The validity of the CLOA cannot be
attacked collaterally. x x x15
SO ORDERED."17
It appears that petitioners had indeed commenced such separate action to assail
the CLOA of respondent, and it would also appear that the action as decided in
favor of petitioners and that it has become final and executory. Nonetheless, the
Certificate of Finality attached by petitioners is n t a certified true copy. Further,
the determination of its validity and its effect on this case is a factual matter that
the Court cannot determine. Thus, as a matter of fairness and in the interest of
speedy disposition of cases, the Court deems it proper to remand the case to the
CA for further proceedings.18
The [CA] generally has the authority to review findings of fact. Its
conclusions as to findings of fact are generally accorded great
respect by this Court.1âшphi1 It is a body that is fully
capacitated and has a surfeit of experience in appreciating
factual matters, including documentary evidence.
Hence, pursuant to Rules 32 and 46 of the Rules of Court, and consistent with
the Court's ruling in Manotok, this case is remanded to the CA in order to: (i)
allow petitioners to present proof of the status of the CLOA of the 4,204-square
meter land located in Barangay San Jose, Malaybalay City, Bukidnon; and (ii)
allow respondent to present controverting evidence, if there be any.
In view of the foregoing, the case is REMANDED to the Court of Appeals for
further proceedings in furtherance of the foregoing purposes and to forthwith
submit its resolution to the Court for appropriate action.
SO ORDERED.
Footnotes
*
Also spelled as "Mortus" in some parts of the rollo.
**
Also spelled as "Neri" in some parts of the rollo.
1
Rollo, pp. 10-21, excluding Annexes.
2
Id. at 36-45. Penned by Associate Justice Edward B. Contreras and concurred in
by Associate Justices Edgardo T. Lloren and Rafael Antonio M. Santos.
3
Id. at 47-48. Penned by Associate Justice Edgardo T. Lloren and concurred in by
Associate Justices Oscar V. Badelles and Rafael Antonio M. Santos.
4
Id. at 28-34.
5
Id. at 22-25.
6
Id. at 37-38.
7
Id. at 25.
8
Id. at 33.
9
Id.
10
Id. at 34.
11
Id. at 41.
12
Id. at 42-43.
13
Id. at 43.
14
Id. at 14.
15
Id. at 43.
16
Id. at 49-50.
17
Id. at 49.
18
The Court adopted the same course of action in the case of Republic v. Banal na
Pag-aaral, Inc., G.R. No. 193305, February 5, 2018.
19
595 Phil. 87 (2008).
20
Id. at 148-149, citing Manotok Realty, Inc. v. CLT Realty Development Corp., 565
Phil. 59, 98-100 (2007). See also IVQ Landholdings, Inc. v. Barbosa, 803 Phil. 419,
440 (2017).