Facts:

This case arose from the petition filed by Catalino F. BaAez and Romeo P. Busuego (petitioners) against the Court of Appeals and Republic Planters Bank (respondents), under G.R. No. 119321, with a decision rendered on March 18, 1997, by the First Division. On December 23, 1987, Ayala Corporation issued a check (Check No. 707802) for P33,226,685.69, payable to the PAL Employees' Savings and Loan Association, Inc. (PESALA). The check was delivered in trust to BaAez, the President of PESALA, and had the phrase "FOR PAYEE'S ACCOUNT ONLY" inscribed on it. Instead of depositing the check into PESALA’s official banking institution, BaAez, along with co-officers Busuego and Renato Lim, deposited the check into their joint account at Republic Planters Bank’s Cubao Branch. These actions led to the withdrawal of the funds without proper accountability to PESALA, raising significant issues of breach of trust and misrepresentation.

On April 21, 1992, PESALA filed a complai

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Facts:

Background of the Transaction

• A check (BPI Check No. 707802) in the amount of P33,226,685.69 was issued by Ayala Corporation for PESALA (PAL Employees’ Savings and Loan Association, Inc.) on 23 December 1987.
• The check, bearing the instruction “FOR PAYEE’S ACCOUNT ONLY”, was delivered in trust to Catalino Baaez in his capacity as President of PESALA.
• Despite its crossed and restricted nature, on the same date, BaAez together with his co-officers Romeo Busuego and Renato Lim deposited the check in their joint account with Republic Planters Bank (RPB) – an account that was not designated as an official depositary for PESALA.

Misappropriation and Subsequent Litigation

• BaAez, Busuego, and Lim subsequently withdrew the check’s amount from the joint account without accounting for the funds to PESALA.
• PESALA later initiated a suit against RPB on 21 April 1992, seeking the face value of the check along with P500,000.00 in damages, contending that the bank allowed the deposit and subsequent encashment of a crossed check against banking rules.

Filing of the Third-Party Complaint

• On 14 March 1994, RPB (by then known as Philippine National Bank-Republic Bank or PNB-RB) moved to file a third-party complaint against BaAez, Busuego, Lim, and Alberto Barican (the branch manager), alleging that their misrepresentation induced the bank into accepting and processing the check deposit.
• The trial court initially deferred resolution on motions to dismiss based on lis pendens and forum shopping, but dismissed the third-party complaint on grounds of lack of jurisdiction and termination of the principal complaint.

Settlement and Subsequent Procedural Developments

• On 6 April 1994, PESALA and PNB-RB forged a compromise agreement, under which PNB-RB agreed to pay PESALA P20,226,685.00 while PESALA undertook to assist in prosecuting the third-party defendants for the presumed misrepresentations.
• The compromise was approved by the trial court on 13 April 1994.
• Following the settlement, motions to dismiss the third-party complaint were raised by third-party defendant Lim and later by petitioners BaAez and Busuego, who additionally argued for dismissal on grounds including lis pendens, forum shopping, lack of jurisdiction, and the terminated main complaint.

Special Civil Action for Certiorari

• On 1 December 1994, petitioners BaAez and Busuego instituted a special civil action for certiorari before the Court of Appeals (CA), alleging grave abuse of discretion in the trial court’s issuance of orders (dated 14 July and 27 October 1994) which dismissed their third-party complaint.
• The core procedural issue raised was their failure to attach certified true copies of the questioned orders – instead, they submitted duplicate originals.
• The CA, through its Special Eleventh Division on 31 January 1995, dismissed the petition on the basis that petitioners did not comply with Sec. 2, par. (a) of the Revised Internal Rules of the Court of Appeals, which mandates the attachment of certified true copies.

Arguments on the Termination of the Main Complaint

• Petitioners contended that since the main complaint by PESALA against PNB-RB had been terminated through a compromise, the derivative or incidental third-party complaint should automatically be dismissed.
• They likened the third-party complaint to a cross-claim, citing the Ruiz Jr. v. Court of Appeals decision in support of their position.
• Respondent PNB-RB, however, maintained that the termination of the main complaint did not extinguish the independent third-party complaint and that the CA’s rules strictly required compliance with formal documentary requirements.

Issue:

Procedural Compliance Issue

• Whether the submission of duplicate originals (as opposed to certified true copies) of the trial court’s orders in the petition for certiorari constitutes sufficient compliance with Sec. 2, par. (a) of the Revised Internal Rules of the Court of Appeals.
• Whether the invocation of the SC Revised Circular No. 1-88, which allows for a clearly legible duplicate original or certified true copy in petitions filed with the Supreme Court, is applicable to petitions before the Court of Appeals.

Merits of the Termination Argument

• Whether the termination (by compromise) of the main complaint between PESALA and PNB-RB automatically renders the third-party complaint against petitioners dismissed or non-justiciable.
• Whether, by analogy with cross-claim jurisprudence, the dismissal of the main action should have divested petitioners of any appealable interest in the third-party complaint.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)