University of The Philippines College of Law - Remedial Law Review

University of the Philippines College of Law | Remedial Law Review
Topic Dismissal by Plaintiff

Case Name HYATT INDUSTRIAL v. LEY CONSTRUCTION
Case No. & Date GR No. 147143 | March 10, 2006
Ponente Austria-Martinez, J.
RELEVANT FACTS:
 1994, RTC Makati – Respondent Ley Construction and Devt. Co (LCDC) filed a complaint for specific performance and
damages against petitioner Hyatt Industrial Manufacturing Corp (Hyatt), claiming that Hyatt reneged in its obligation to
transfer 40% of the pro indiviso share of a real property in Makati in favor of LCDC despite LCDCs full payment of the
purchase price of P2,634,000.00; and that Hyatt failed to develop the said property in a joint venture, despite LCDCs
payment of 40% of the preconstruction cost.
 LCDC filed an amended complaint impleading Princeton Development Corporation (Princeton) as additional defendant
claiming that Hyatt sold the subject property to Princeton in fraud of LCDC.
 LCDC filed a second amended complaint adding as defendant, Yu He Ching (Yu), President of Hyatt, alleging that LCDC paid
the purchase price of P2,634,000.00 to Hyatt through Yu.
 Responsive pleadings were filed and LCDC filed notices to take the depositions of Yu; Pacita Tan Go, Account Officer of Rizal
Commercial Banking Corporation (RCBC); and Elena Sy, Finance Officer of Hyatt. Hyatt also filed notice to take deposition of
Manuel Ley, President of LCDC, while Princeton filed notice to take the depositions of Manuel and Janet Ley.
 1996 – RTC ordered the deposition taking to proceed.
 Hyatt and Yu prayed that all settings for depositions be disregarded and pretrial be set instead, contending that the taking
of depositions only delay the resolution of the case.
 The RTC agreed and on the same day ordered all depositions cancelled and pretrial to take place on November 14, 1996.
o LCDC filed MR, but the RTC denied this.
 CA – on scheduled date of the pretrial, LCDC filed an Urgent Motion to Suspend Proceedings Due to Pendency of Petition
for Certiorari in the Court of Appeals.
o NOTE: This Petition for Certiorari against the RTC orders canceling the depo, later denied.
 MEANWHILE, pretrial proceeded at the RTC as scheduled and with the refusal of LCDC to enter into pretrial, Hyatt, Yu and
Princeton moved to declare LCDC nonsuited which the RTC granted.
o Here, plaintiff orally moved the Court to suspend pre-trial conference alleging there was a prejudicial questions
because of the pending petition in the CA. Before this Court denied plaintiffs motion to suspend, this Court gave
Plaintiff two (2) options: enter into a pretrial conference, advising plaintiff that what it would like to obtain at the
deposition may be obtained at the pretrial conference, thus expediting early termination of this case; and,
terminate the pretrial conference and apply for deposition later on. Plaintiff insisted on suspension of the pretrial
conference alleging that it is not ready to enter into pretrial conference in view of the petition for certiorari with
the Court of Appeals.
 LCDC filed a motion for reconsideration but this was denied by the TC
 CA found LCDC’s appeal meritorious and ordered the REMAND of the case to RTC, for further hearing and directing it to
allow the deposition taking without delay.
o REASONING: The CA reasoned that: LCDC complied with Section 1, Rule 23 of the 1997 Rules of Civil Procedure
which expressly sanctions depositions as a mode of discovery without leave of court after the answer has been
served; to unduly restrict the modes of discovery during trial would defeat the very purpose for which it is
intended which is a pretrial device, and at the time of the trial, the issues would already be confined to matters
defined during pretrial; together with the other modes of discovery are devised by the rules as a means to attain
the objective of having all the facts presented to the court; the trial court also erred in dismissing the complaint as
LCDC appeared during the pretrial conference and notified it of the filing of a petition before the CA; such is a
legitimate justification to stall the pretrial conference, as the filing of the petition was made in good faith in their
belief that the court a quo erred in canceling the deposition schedule for no apparent purpose.
 Hyatt and Princeton filed their respective MRs, denied by the CA. Hence this petition for review on certiorari.
PETITIONER’S ARGUMENT(S):
Conducting discovery thru deposition is not a condition sine qua non to the holding of pre-trial and the fact that LCDC wanted to
take the depo of certain persons is not a valid ground to suspend the holding of pre-trial. LCDC is causing undue delay because it
only started looking for evidence to support its allegations; more than 2 years have passed after filing the complaint and LCDC still
has no documentary evidence to present to prove the allegations of the complaint.
RESPONDENT’S ARGUMENT(S):
University of the Philippines College of Law | Remedial Law Review
The CA did not overstep its authority. “Petitioners have nothing to fear from discovery unless they have in their possession damaging
evidence”.
ISSUES AND RATIO:

1. W/N the CA erred in remanding the case to the RTC and ordering the deposition-taking to proceed  NO
RULE NOW: AM 03-1-09-SC provides for the guideline to be observed by trial judges and clerks of court in the conduct of
pre-trial and use of deposition-discovery measures.
 Under A.M. No. 03109SC, trial courts are directed to issue orders requiring parties to avail of interrogatories to parties
under Rule 45 and request for admission of adverse party under Rule 26 or at their discretion make use of depositions
under Rule 23 or other measures under Rule 27 and 28 within 5 days from the filing of the answer.
 The parties are likewise required to submit, at least 3 days before the pretrial, pretrial briefs, containing among others a
manifestation of the parties of their having availed or their intention to avail themselves of discovery procedures or referral
to commissioners.
BUT, THIS IS INAPPLICABLE BECAUSE the pertinent incidents of the case took place prior to the effectivity of said issuance, however,
the depositions sought by LCDC shall be evaluated based on the jurisprudence and rules then prevailing, particularly Sec. 1, Rule 23
of the 1997 Rules of Court which provides as follows:
SECTION 1. Depositions pending action, when may be taken. By leave of court after jurisdiction has been obtained over any
defendant or over property which is the subject of the action, or without such leave after an answer has been served, the
testimony of any person, whether a party or not, may be taken, at the instance of any party, by deposition upon oral examination
or written interrogatories. The attendance of witnesses may be compelled by the use of a subpoena as provided in Rule 21.
Depositions shall be taken only in accordance with these Rules. The deposition of a person confined in prison may be taken only by
leave of court on such terms as the court prescribes. (Emphasis supplied).
DELAY IS NOT REASON TO CANCEL SCHEDULED DEPO

While speedy disposition of cases is important, such consideration however should not outweigh a thorough and comprehensive
evaluation of cases, for the ends of justice are reached not only through the speedy disposal of cases but more importantly, through
a meticulous and comprehensive evaluation of the merits of the case. Records also show that the delay of the case is not
attributable to the depositions sought by LCDC but was caused by the many pleadings filed by all the parties including petitioners
herein.
NO DUPLICITY AS THE INTENDED DEPONENTS WILL ALSO BE CALLED AS WITNESSES DURING TRIAL
The right to take statements and the right to use them in court have been kept entirely distinct. The utmost freedom is allowed in
taking depositions; restrictions are imposed upon their use. As a result, there is accorded the widest possible opportunity for
knowledge by both parties of all the facts before the trial. Thus, the only limitations for depositions: relevancy and privilege.
RE: AVAILING DISCOVERY 2 YRS AFTE COMPLAINT

Deposition is chiefly a mode of discovery, the primary function of which is to supplement the pleadings for the purpose of disclosing
the real matters of dispute between the parties and affording an adequate factual basis during the preparation for trial.
2 OPTIONS GIVEN BY RTC WRONG – IT CAN’T FORCE LCDC TO UNDERGO PRE-TRIAL AND HAVE DEPO AFTER
The information LCDC seeks to obtain through the depositions of Elena Sy, the Finance Officer of Hyatt and Pacita Tan Go, an
Account Officer of RCBC, may not be obtained at the pretrial conference, as the said deponents are not parties to the pretrial
conference. Indeed, it is the purpose and policy of the law that the parties before the trial if not indeed even before the pretrial
should discover or inform themselves of all the facts relevant to the action, not only those known to them individually, but also
those known to their adversaries; in other words, the desideratum is that civil trials should not be carried on in the dark (Republic
v. Sandiganbayan).
CASE AT BAR: In this case, the information sought to be obtained through the depositions of Elena and Pacita are necessary to fully
equip LCDC in determining what issues will be defined at the pre trial. Without such information before pretrial, LCDC will be forced
to prosecute its case in the dark.

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University of the Philippines College of Law | Remedial Law Review

Topic Dismissal by Plaintiff

ISSUES AND RATIO:

DELAY IS NOT REASON TO CANCEL SCHEDULED DEPO

RE: AVAILING DISCOVERY 2 YRS AFTE COMPLAINT

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