October 26, 1968
Ponente: Castro, J.
FACTS
Central Surety & Insurance Co. executed in favor of the Deportation Board a bond in the amount of P5,000 for the temporary release of Po Kee Kam, who was a Chinese citizen and the respondent in a deportation proceeding. The bond was subject to certain condition, among which were 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.
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. Subsequently, 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.
Despite repeated demands, the Surety failed to remit the said amount without justifiable cause. This prompted the Republic to file a collection suit against the Surety and its manager, Casimiro Mangoba, before the CFI for the sum of P5,000 plus P1,000 for attorney's fees.
Surety's arguments: (1) that its bond cannot be made liable beyond the amount of P5,000; (2) that it was not liable for attorney's fees in the absence of any stipulation to that effect; (3) that the court did not have jurisdiction over the case as the amount involved was only P5,000; and (4) that the Republic had no cause of action.
Later on, the Surety filed a third-party complaint against Po Kee Kam and Tony Go, 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, Kam and Go, 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.
CFI ruling: (a) Third-party complaint against Kam and Go is dismissed for lack of jurisdiction; (b) the Surety is ordered to pay P5,000 in favor of the Republic.
The Surety filed an appeal before the CA regarding the dismissal of its third-party complaint on jurisdictional grounds. Thereafter the CA certified the case to the SC on the ground that the jurisdiction of the trial court was squarely in issue.
RULING
Petition is partly meritorious. The CFI's order dismissing the third-party complaint is set aside. CFI's ruling ordering the Surety to pay P5,000 to the Republic is affirmed. Kam and Go are ordered to pay to the Surety whatever sums the latter will pay to the Republic.
Whether the CFI's dismissal of the Surety's third-party complaint was proper. – NO.
When the Republic filed a collection suit against the Surety in 1963, the prevailing rule was that CFIs were vested with jurisdiction over cases in which the demand, exclusive of interest, or the value of the property in controversy, exceeds P10,000. Since the demand in the present case was only for P6,000, then the Surety was arguing that the case should have been properly filed with, or at the very least remanded to, the MTC. In fact, it was only 2 days after the case was filed when RA 3828 took effect, 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.
But the SC held that the CFI acquired jurisdiction over the subject-matter when the complaint was filed with it because "the rule is firmly entrenched in our law that jurisdiction once acquired continues until the case is finally terminated." This is regardless if the summons were served and the case was heard and decided after the effectivity of RA 3828.
The conclusion therefore is that the CFI had proper jurisdiction over the case. The SC held that the CFI's ruling ordering the Surety to pay P5,000 to the Republic was proper because it was shown in court that the Surety received sufficient notice from the Republic to have Kam appear in court.
Granted, it was improper for the CFI to dismiss the Surety's third-party complaint on jurisdictional grounds. In the present case, the CFI dismissed the third-party complaint because it held that the demand therein did not exceed P10,000 and was therefore not within the jurisdiction of the Court of First Instance if it were an independent action.
But the third-party complaint is an ancillary suit 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. A contrary rule would result in "split jurisdiction" which is not favored, and in multiplicity of suits, a situation obnoxious to the orderly administration of justice.
Instead of remanding the third-party complaint to the CFI, however, the SC held that under the environmental circumstances, there was clearly no need to do so anymore on account of the fact that Kam and Go did not specifically deny the execution of the indemnity agreement (where they bound themselves to indemnify the Surety 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 subject bond).
In the words of the Court: "To obviate further litigation between the Surety and the third-party defendants (i.e., Kam and Go), 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 (i.e., 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).".
DOCTRINE
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."
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.
