G.R. No. L-4373 May 29, 1952
Enrique Bautista, plaintiff-appellee, vs. Leoncia Reyes, defendant-appellant.

FACTS

The plaintiff, Enrique Bautista, filed an action to recover rentals for properties he allegedly purchased from the defendant, Leoncia Reyes, under a deed of sale with pacto de retro, which the defendant failed to repurchase within the stipulated period. The defendant answered, alleging the deed was fictitious and that the true agreement was a loan with usurious interest, with the properties conveyed merely as security. The trial court found the deed to be an equitable mortgage and dismissed the action. The plaintiff’s appeal was dismissed for not being perfected on time. After the record was returned to the trial court, the defendant filed a petition to have her expenses, primarily professional fees paid to her lawyers amounting to P1,159.56, taxed as costs against the plaintiff under Section 4, Rule 131 of the Rules of Court. She claimed the plaintiff’s allegations in the complaint were found false by the court. The plaintiff opposed, arguing the allegations were based on a public document and that the court’s finding of an equitable mortgage did not make them untrue, and also objected to the inclusion of attorney’s fees as costs absent a special provision. The trial court denied the defendant’s petition, holding that the defendant should have proved at the trial that the plaintiff’s averments were made without reasonable cause and were false, and the resulting expenses should also have been proven then, and that such a matter could not be raised by a motion filed after judgment. The defendant appealed this denial.

ISSUE

Whether the trial court erred in denying the defendant’s petition to have her expenses, including attorney’s fees, taxed as costs against the plaintiff under Section 4, Rule 131 of the Rules of Court, which allows for such taxation when an averment in a pleading is made without reasonable cause and found untrue.

RULING

The Supreme Court affirmed the trial court’s denial of the petition and dismissed the appeal. The Court held that the right to have expenses taxed as costs under Section 4, Rule 131 requires as essential elements: (1) a finding by the trial court in the main action that the allegations of a pleading are untrue, and (2) proof during the trial that the adverse party incurred expenses because of such untrue pleading. These are not mere procedural defenses that can be waived but are constitutive elements of the right itself. The Court found the defendant’s claim that she proved the falsity at trial to be unfounded, as there was no such claim made, no finding to that effect in the decision, and no counterclaim presented to bring the matter into issue. Furthermore, the Court ruled that the requirement for these expenses to be determined at the trial is a necessary corollary to the procedural system allowing only one trial and one appeal, ensuring all issues are resolved by the trial court before an appeal. Allowing a separate proceeding for these costs would necessitate a second trial and potential second appeal, contrary to this fundamental system. The appeal was dismissed, with costs against the appellant.