Title
Sy-Vargas vs. Estate of Ogsos
Case
G.R. No. 221062
Decision Date
Oct 5, 2016
A lease dispute over agricultural land led to claims of unpaid rent and counterclaims for lost profits, with courts ruling on timeliness, counterclaim nature, and damages, ultimately reducing the award for unpaid rentals.
lease contract
agricultural land
motion for reconsideration
A

Case Summary (G.R. No. 221062)

Factual Background

On February 10, 1994, Rolando Ogsos, Sr. and the heirs of Fermina Pepico, represented by an attorney‑in‑fact, executed a lease of five parcels of agricultural land in Maaslum, Manjuyod, Negros Oriental, covering some twenty‑three hectares. The original rent was fixed at 230 piculs (290.95 lkg.) of centrifugal sugar per crop year beginning 1994‑1995. The lease term was extended on June 5, 1996 to end at crop year 2004 because of introduced improvements, and on December 30, 1996 the parties amended the rental to P150,000.00 in cash per crop year beginning 1996‑1997. Petitioners, heirs of Fermina, alleged nonpayment of rents from crop year 1994‑1995 to 1998‑1999 and filed a complaint for specific performance and damages on April 27, 2000, excluding the 1999‑2000 crop year on the ground of respondents' alleged abandonment. Respondents denied abandonment and counterclaimed for lost profits and damages, alleging that petitioners took possession in December 1998 and appropriated sugarcane ready for harvest.

Procedural History

Summons was served in May 2000. Respondent Rolando Ogsos, Jr. filed an answer with counterclaim on December 17, 2002; petitioners moved to declare respondents in default, which the trial court granted on March 7, 2003. The Court of Appeals, in CA‑G.R. SP No. 79463, granted respondents' certiorari and remanded to permit admission of the answer. Respondents later sought dismissal of the complaint for lack of a Certificate of Non‑Forum Shopping; the RTC dismissed the case without prejudice on November 9, 2005. The court thereafter set respondents' counterclaim for reception of evidence and, after petitioners and their counsel failed to appear at pretrial, allowed respondents to present evidence ex parte and declared petitioners in default. Petitioners' motions to quash and to dismiss the counterclaim were denied, the latter on the ground that the counterclaim was compulsory.

Trial Court Decision

In a Decision dated July 2, 2007, the RTC granted respondents' counterclaim and ordered petitioners to pay P10,391,987.76 worth of sugar and molasses as the value of lost production for the crop years during which respondents were deprived of possession, plus moral damages of P500,000.00, exemplary damages of P100,000.00, attorney's fees of P100,000.00 and P1,000.00 per personal appearance, and costs of suit of P50,000.00. The RTC found that respondents had faithfully paid rent from 1994 to 1998, that petitioners unlawfully took possession in December 1998 and harvested crops over respondents' objections, and that respondents thereby lost profits for six crop years from 1999 to 2004.

Court of Appeals Ruling

The Court of Appeals affirmed the RTC decision in a February 28, 2014 Decision but deleted awards for moral and exemplary damages as well as attorney's fees and costs for lack of proof of fraud or bad faith. The CA upheld the RTC's finding that respondents' counterclaim was compulsory and that the payment of docket fees was therefore unnecessary. Petitioners filed a motion for reconsideration on March 31, 2014, which the CA denied as filed out of time in its October 1, 2015 Resolution; petitioners thereafter filed the present petition to this Court.

Issues Presented to the Supreme Court

The Court identified three principal questions: whether the CA correctly ruled that petitioners' motion for reconsideration was filed out of time; whether respondents' counterclaim is compulsory or permissive such that payment of docket fees is required; and whether respondents are entitled to the relief awarded on their counterclaim.

Timeliness of Motion for Reconsideration

The Court held that the CA erred in deeming petitioners' March 31, 2014 motion for reconsideration late. The CA had computed the period from the March 14, 2014 receipt of the CA Decision, allowing until March 29, 2014, but failed to account that March 29, 2014 fell on a Saturday. Under Section 1, Rule 22, Rules of Court, when the last day falls on a Saturday, the time runs until the next working day; therefore petitioners were justified in filing on Monday, March 31, 2014. The CA should have considered and resolved the motion on the merits. The Court nevertheless chose to decide the merits rather than remand because there was sufficient basis to resolve the substantive issues and because petitioner sought merits resolution.

Nature of the Counterclaim and Docket Fees

The Court reviewed the distinction between compulsory and permissive counterclaims and applied the four‑part test articulated in Spouses Mendiola v. CA: similarity of factual and legal issues, preclusive effect by res judicata, commonality of evidence, and logical relation that would make separate trials duplicative. The Court concluded that respondents' counterclaim for damages was permissive. The principal reasons were that petitioners' complaint for unpaid rent and respondents' counterclaim for wrongful dispossession and lost profits arose from different occurrences; res judicata would not bar a separate suit on respondents' claim; different evidence would be required; and separate trials would not produce substantial duplication of effort. Consequently, respondents should have paid docket fees for their permissive counterclaim. The Court, however, declined to dismiss the counterclaim for nonpayment because respondents had acted in good faith in relying on the RTC's November 16, 2006 finding that the counterclaim was compulsory and on subsequent affirmances by the CA. Citing Unicapital, Inc. v. Consing, Jr. and Intercontinental Broadcasting Corporation v. Legasto, the Court ordered that the unpaid docket fees be assessed and constitute a judgment lien on respondents' monetary award, to be enforced by the Clerk of Court under Section 2, Rule 141, Rules of Court.

Merits of the Counterclaim and Quantum

The Court accepted the RTC's factual findings, as affirmed by the CA, that petitioners unlawfully dispossessed respondents in December 1998 and that respondents were thereby deprived of profits for the six crop yea

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