Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 193650 October 8, 2014

GEORGE PIDLIP P. PALILEO and JOSE DE LA CRUZ, Petitioners,

vs.
PLANTERS DEVELOPMENT BANK, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the July 28, 2009 Amended Decision2 of the Court
of Appeals (CA) in CA-G.R. SP No. 01317-MIN, entitled "Planters Development Bank,
Petitioner, versus Hon. Eddie R. Roxas (in his capacity as the former Pairing Judge), Hon.
Panambulan M Mimbisa (in his capacity as the Presiding Judge of RTC, Branch 37, General
Santos City), Sheriff Marilyn P. Alano, Sheriff Ramon A. Castillo, George Philip P. Palileo, and
Jose Dela Cruz, Respondents," as well as its August 23, 2010 Resolution3 denying
reconsideration of the assailed amended judgment.

Factual Antecedents

In a June 15, 2006 Decision4 rendered by the Regional Trial Court (RTC) of General Santos
City, Branch 37, in an action for specific performance/sum of money with damages docketed as
Civil Case No. 6474 and entitled "George Philip P. Palileo and Jose Dela Cruz, Plaintiffs,
versus, Planters Development Bank, Engr. Edgardo R. Torcende, Arturo R. delos Reyes,
Benjamin N. Tria, Mao Tividad and Emmanuel Tesalonia, Defendants," it was held thus:

Before this Court is a complaint for specific performance and/or sum of money and damages
with prayer for the issuance of writs of preliminary attachment and preliminary injunction filed by
Plaintiff George Philip Palileo and Jose L. Dela Cruz against Engr. Edgardo R. Torcende,
Planters Development Bank (defendant Bank), Arturo R. Delos Reyes, Benjamin N. Tria, Mao
Tividad, and Emmanuel Tesalonia on 22 December 1998.

After summons together with the verified Complaint and its annexes were duly served upon
defendants, the latter answered. During Pre-Trial conference defendant Bank manifested [its]
intention of settling the case amicably and several attempts to explore the said settlement [were]
made as per records of this case. In the last pre-trial hearing dated 17 November 2000, only
plaintiffs[,] George Philip Palileo and Jose L. Dela Cruz[,] and their counsel appeared, thus, the
latter move [sic] for the presentation of evidence ex-parte, which was granted by the Court with
the reservation of verifying the return card [to determine] whether the order for the pre-trial was
indeed received by defendants. Finally, [at the] 21 November 2001 hearing, x x x defendants
[again] failed to appear and their failure to file pre-trial brief was noted; thus [plaintiffs were]
allowed to present evidence ex-parte before the Clerk of Court.

xxxx

IN LIGHT OF THE FOREGOING, defendants are hereby ORDERED to jointly and severally
PAY plaintiffs as follows:
 i) Actual Damages;

a) Plaintiff George Philip Palileo[,] the amount of Two Million Six Hundred Five
Thousand Nine [sic] Seventy Two Pesos and Ninety Two Centavos
(₱2,605,972.92), with 12% compounded interest [per annum] reckoned from the
filing of this case until full settlement thereof;

b) Plaintiff Jose R. Dela Cruz[,] the amount of One Million Five Hundred Twenty
Nine Thousand Five Hundred Eight Thousand [sic] and Eighty Centavos
(₱1,529,508.80), with 12% compounded interest [per annum] reckoned from the
filing of this case until full settlement thereof;

ii) Moral damages in the amount of Five Hundred Thousand Pesos (₱500,000.00) each;

iii) Exemplary Damages in the amount of Five Hundred Thousand Pesos (₱500,000.00)
each;

iv) Attorney’s Fees in the amount of Five Hundred Thousand [Pesos] (₱500,000.00)
each x x x and to pay the costs.

SO ORDERED.5

Respondent Planters Development Bank (PDB) received a copy of the RTC Decision on July
17, 2006.

On July 31, 2006, PDB filed by private courier service – specifically LBC6 – an Omnibus Motion
for Reconsideration and for New Trial,7 arguing therein that the trial court’s Decision was based
on speculation and inadmissible and selfserving pieces of evidence; that it was declared in
default after its counsel failed to attend the pre-trial conference on account of the distance
involved and difficulty in booking a flight to General Santos City; that it had adequate and
sufficient defenses to the petitioners’ claims; that petitioners’ claims are only against its
codefendant, Engr. Edgardo R. Torcende [Torcende]; that the award of damages and attorney’s
fees had no basis; and that in the interest of justice, it should be given the opportunity to cross-
examine the petitioners’ witnesses, and thereafter present its evidence.

Petitioners’ copy of the Omnibus Motion for Reconsideration and for New Trial was likewise sent
on July 31, 2006 by courier service through LBC, but in their address of record – Tupi, South
Cotabato – there was no LBC service at the time.

On August 2, 2006, PDB filed with the RTC another copy of the Omnibus Motion for
Reconsideration and for New Trial via registered mail; another copy thereof was simultaneously
sent to petitioners by registered mail as well.

Meanwhile, petitioners moved for the execution of the Decision pending appeal.

In an August 30, 2006 Order,8 the RTC denied the Omnibus Motion for Reconsideration and for
New Trial, while it granted petitioners’ motion for execution pending appeal, which it treated as a
motion for the execution of a final and executory judgment. The trial court held, as follows:

Anent the first motion, records show that the Omnibus Motion for Reconsideration and for New
Trial dated 28 July 2006 was initially filed via an LBC courier on 28 July 2006 and was actually
received by the Court on 31 July 2006, which was followed by filing of the same motion thru
registered mail on 2 August 2006. Said motion was set for hearing by the movant on 18 August
2006 or 16 days after its filing.
The motion fails to impress. Section 5, Rule 159 of the 1997 Rules of Civil Procedure as
amended is pertinent thus:

Section 5. Notice of hearing. – The notice of hearing shall be addressed to all parties
concerned, and shall specify the time and date of the hearing which must not be later than ten
(10) days after the filing of the motion. (Underscoring and italics supplied)

The aforesaid provision requires [that] every motion shall be addressed to all parties concerned,
and shall specify the time and date of the hearing NOT later than ten (10) days after the filing of
the motion. Being a litigated motion, the aforesaid rule should have been complied [with]. Its
noncompliance renders it defective.

[The] Rule is settled that a motion in violation thereof is pro forma and a mere scrap of paper. It
presents no question which the court could decide [upon]. In fact, the court has NO reason to
consider it[;] neither [does] the clerk of court [have] the right to receive the same. Palpably, the
motion is nothing but an empty formality deserving no judicial cognizance. Hence, the motion
deserves a short shrift and peremptory denial for being procedurally defective.

As such, it does not toll the running of the reglementary period thus making the assailed
decision final and executory. This supervening situation renders the Motion for Execution
pending appeal academic but at the same time it operates and could serve [as] well as a motion
for execution of the subject final and executory decision. Corollarily, it now becomes the
ministerial duty of this Court to issue a writ of execution thereon.

IN LIGHT OF THE FOREGOING, the Omnibus Motion for Reconsideration and New Trial is
hereby DENIED, and the Motion for Execution Pending Appeal (which is treated as a motion for
execution of a final and executory judgment) is also GRANTED as explained above.
Accordingly, let A WRIT OF EXECUTION be issued against herein defendants to enforce the
FINAL and EXECUTORY Decision dated 15 June 2006.

SO ORDERED.10

PDB received a copy of the above August 30, 2006 Order on September 14, 2006.11

On August 31, 2006, a Writ of Execution12 was issued. PDB filed an Urgent Motion to Quash
Writ of Execution,13arguing that it was prematurely issued as the June 15, 2006 Decision was
not yet final and executory; that its counsel has not received a copy of the writ; and that no entry
of judgment has been made with respect to the trial court’s Decision. Later on, it filed a
Supplemental Motion to Quash Writ of Execution,14 claiming that the writ was addressed to its
General Santos branch, which had no authority to accept the writ.

On September 7, 2006, PDB filed a Notice of Appeal.15

In an October 6, 2006 Order,16 the RTC denied the motion to quash the writ of execution.

On October 9, 2006, the RTC issued a second Writ of Execution.17

Ruling of the Court of Appeals

On October 11, 2006, PDB filed with the CA an original Petition for Certiorari, which was later
amended,18 assailing 1) the trial court’s August 30, 2006 Order – which denied the omnibus
motion for reconsideration of the RTC Decision and for new trial; 2) its October 6, 2006 Order –
which denied the motion to quash the writ of execution; and 3) the August 31, 2006 and October
9, 2006 writs of execution.
On May 31, 2007, the CA issued a Decision19 dismissing PDB’s Petition for lack of merit. It
sustained the trial court’s pronouncement, that by setting the hearing of the Omnibus Motion for
Reconsideration and for New Trial on August 18, 2006 – or 16 days after its filing on August 2,
2006 – PDB violated Section 5, Rule 15 of the Rules of Court which categorically requires that
the notice of hearing shall specify the time and date of the hearing which must not be later than
10 days after the filing of the motion. Citing this Court’s ruling in Bacelonia v. Court of
Appeals,20 the CA declared that the 10-day period prescribed in Section 5 is mandatory, and a
motion that fails to comply therewith is pro forma and presents no question which merits the
attention and consideration of the court.

The appellate court further characterized PDB’s actions as indicative of a deliberate attempt to
delay the proceedings, noting that it did not timely move to reconsider the trial court’s November
17, 2000 ruling21 allowing petitioners to present their evidence ex parte, nor did it move to be
allowed to present evidence in support of its defense. It was only after the RTC rendered its
June 15, 2006 Decision that PDB moved to be allowed to cross-examine petitioners’ witnesses
and to present its evidence on defense.

The CA likewise held that the RTC did not err in ruling that the omnibus motion for
reconsideration did not toll the running of the prescriptive period, which thus rendered the June
15, 2006 Decision final and executory. It noted as well that PDB’s September 7, 2006 notice of
appeal was tardy.

The CA found no irregularity with respect to the writs of execution, which contained the fallo of
the June 15, 2006 Decision of the RTC – thus itemizing the amount of the judgment obligation.
Additionally, it held that the fact that the judgment debtors are held solidarily liable does not
require that the writs should be served upon all of the defendants; that it is not true that the
sheriffs failed to make a demand for the satisfaction of judgment upon PDB, as the mere
presentation of the writ to it operated as a demand to pay; and that PDB failed to attach the
Sheriff’s Return to its Petition, which thus prevents the appellate court from resolving its claim
that the writs were not validly served.

PDB filed a Motion for Reconsideration,22 arguing that Rule 15, Section 5 of the Rules of Court
should be relaxed in view of the fact that judgment against it was based on a technicality – and
not on a trial on the merits; that there was no deliberate intention on its part to delay the
proceedings; that the court acted with partiality in declaring that the Omnibus Motion for
Reconsideration and for New Trial was pro forma; that its notice of appeal was timely; and that
the writs of execution are null and void.

On July 28, 2009, the CA made a complete turnaround and issued the assailed Amended
Decision, which decreed thus:

WHEREFORE, the motion for reconsideration is GRANTED. This Court’s May 31, 2007
Decision is SET ASIDE and a new one is rendered GRANTING the petition for certiorari. The
trial court’s Order dated August 30, 2006 is SET ASIDE and the Writ of Execution issued by the
trial court is QUASHED. The trial court is ORDERED to hear and rule on the merits of
petitioner’s "Omnibus Motion for Reconsideration and New Trial."

SO ORDERED.23

The CA reversed its original finding that the Omnibus Motion for Reconsideration and for New
Trial was pro forma. This time, it held just the opposite, ruling that PDB’s "tacit argument" that
the "distances involved in the case at bench call for a relaxation of the application of Section 5,
Rule 15 of the Rules of Court" deserved consideration. It held that Section 5 should be read
together with Section 424 of the same Rule, thus:
When a pleading is filed and served personally, there is no question that the requirements in
Sections 4 and 5 of Rule 15 of the Revised Rules of Civil Procedure pose no problem to the
party pleading. Under this mode of service and filing of pleadings, the party pleading is able to
ensure receipt by the other party of his pleading at least three days prior to the date of hearing
while at the same time setting the hearing on a date not later than ten days from the filing of the
pleading.

When, as in the case at bench, the address of the trial court as well as that of the opposing
counsel is too distant from the office of the counsel of the party pleading to personally effect the
filing and service of the pleading, the latter counsel faces a real predicament. In a perfect world
with the best postal service possible, it would be problematic enough to ensure that both
requisites are fully met: that opposing counsel receives the pleading at least three days before
the date of hearing and that the date of hearing is no more than ten days after the filing (mailing)
of the pleading. But, as a matter of fact, given the state of the postal service today – a matter
the Court takes judicial notice of – the party pleading often finds himself [locked] between the
horns of a dilemma.

The case at bench presents the Court with the novel issue of whether the same rigid application
of the cited Sections-and-Rule is warranted when the filing and service of pleadings is by mail.
The Court is of the opinion that when confronted between [sic] the demands of sufficient notice
and due process on the one hand and the requirement that the date of hearing be set no later
than ten days from filing, the stringent application of the Rules is not warranted and a liberal
posture is more in keeping with Section 6, Rule 1 of the 1997 Rules of Civil Procedure which
provides:

SECTION 6. Construction. - These Rules shall be liberally construed in order to promote their
objective of securing a just, speedy, and inexpensive disposition of every action and
proceeding.25

The CA further sustained PDB’s argument that since judgment against it was arrived at by mere
default or technicality, it is correspondingly entitled to a relaxation of the Rules, in line with the
principles of substantial justice. It likewise held that PDB counsel’s act of setting the hearing of
the Omnibus Motion for Reconsideration and for New Trial 16 days after its filing was an
excusable lapse; that no scheme to delay the case is evident from PDB’s actions; that more
telling is the trial court’s "blurring in cavalier fashion" the distinction between Sections 1 and 2 of
Rule 39 of the Rules of Court,26 as well as its unequal treatment of the parties from its strict
application of Section 5, Rule 15 against respondent, while it bent backward to accommodate
petitioners by converting the latter’s motion for execution pending appeal into a motion for
execution of a final and executor judgment.

Lastly, the appellate court concluded that the trial court committed grave abuse of discretion,
which thus warrants the grant of PDB’s Petition for Certiorari.

Petitioners filed their Urgent Motion for Reconsideration,27 which the CA denied through its
assailed August 23, 2010 Resolution. Hence, the instant Petition.

Issues

Petitioners frame the issues involved in this Petition, as follows:

Being assailed herein is the refusal of the Court of Appeals, which is a patent error, for not
giving credence to petitioners-appellants’ arguments that the respondent-appellees’ special civil
action for certiorari before it is clearly devoid of merit as (i) the Decision dated June 15, 2006 of
the RTC, Branch 37, General Santos City had become final and executory before the special
civil action for Certiorari was filed before it which should have been dismissed outright, and
which issue of "finality" was never ruled upon, (ii) granting arguendo that a certiorari proceeding
could still be had, the same should be filed under Rule 45 instead of Rule 65 of the 1997 Rules
of Civil Procedure, (iii) the alleged attendant abuse of discretion on the part of the public
respondent judges, even granting arguendo that it exist [sic], were [sic] not grave but on the
contrary were purely errors of judgment and, (iv) the substantial and glaring defects of the
petition in the special civil action for certiorari before the Court of Appeals were consistently and
clearly called to its attention but were unjustifiably ignored by it.28

Petitioners’ Arguments

In their Petition and Reply,29 petitioners seek to reverse the assailed CA dispositions and to
reinstate the appellate court’s original May 31, 2007 Decision, arguing that the trial court’s June
15, 2006 Decision became final and executor on account of PDB’s failure to timely file its
Omnibus Motion for Reconsideration and for New Trial, as it properly filed the same only on
August 2, 2006 – or beyond the 15-day period allowed by the Rules of Court.

Petitioners argue that PDB’s filing of its Omnibus Motion for Reconsideration and for New Trial
on July 31, 2006 by courier service through LBC was improper, since there was no LBC courier
service in Tupi, South Cotabato at the time; naturally, they did not receive a copy of the omnibus
motion. This is precisely the reason why PDB re-filed its omnibus motion on August 2, 2006
through registered mail, that is, to cure the defective service by courier; but by then, the 15-day
period within which to move for reconsideration or new trial, or to file a notice of appeal, had
already expired, as the last day thereof fell on August 1, 2006 – counting from PDB’s receipt of
the trial court’s Decision on July 17, 2006.

Petitioners add that PDB’s notice of appeal – which was filed only on September 7, 2006 – was
tardy as well; that PDB’s resort to an original Petition for Certiorari to assail the trial court’s
August 30, 2006 Order denying the Omnibus Motion for Reconsideration and for New Trial was
improper, for as provided under Section 9, Rule 37 of the Rules of Court,30 an order denying a
motion for new trial or reconsideration is not appealable, the remedy being an appeal from the
judgment or final order; that certiorari was resorted to only to revive PDB’s appeal, which was
already lost; and that it was merely a face-saving measure resorted to by PDB to recover from
its glaring blunders, as well as to delay the execution of the RTC Decision. They also assert that
certiorari is not an available remedy, since PDB did not file a motion for reconsideration with
respect to the other assailed orders of the trial court.

Petitioners maintain as well that the CA erred in relaxing the application of the Rules of Court as
to PDB, a banking institution with adequate resources to engage counsel within General Santos
City and not relegate Civil Case No. 6474 to its Manila lawyers who are thus constrained by the
distance involved.

Respondent’s Arguments

Seeking the denial of the Petition, PDB in its Comment31 maintains that the CA did not err in
declaring that its Omnibus Motion for Reconsideration and for New Trial was not pro forma; that
there are justifiable grounds to move for reconsideration and/or new trial; that it had no intention
to delay the proceedings; that it was correct for the appellate court to relax the application of
Section 5, Rule 15; and that the CA is correct in finding that the trial court committed grave
abuse of discretion in misapplying the Rules and in exhibiting partiality.

Our Ruling

The Court grants the Petition.

The proceedings in the instant case would have been greatly abbreviated if the court a quo and
the CA did not overlook the fact that PDB’s Omnibus Motion for Reconsideration and for New
Trial was filed one day too late. The bank received a copy of the trial court’s June 15, 2006
Decision on July 17, 2006; thus, it had 15 days – or up to August 1, 2006 – within which to file a
notice of appeal, motion for reconsideration, or a motion for new trial, pursuant to the Rules of
Court.32 Yet, it filed the omnibus motion for reconsideration and new trial only on August 2,
2006.

Indeed, its filing or service of a copy thereof to petitioners by courier service cannot be
trivialized.1âwphi1 Service and filing of pleadings by courier service is a mode not provided in
the Rules.33 This is not to mention that PDB sent a copy of its omnibus motion to an address or
area which was not covered by LBC courier service at the time. Realizing its mistake, PDB re-
filed and re-sent the omnibus motion by registered mail, which is the proper mode of service
under the circumstances. By then, however, the 15-day period had expired.

PDB’s Notice of Appeal, which was filed only on September 7, 2006, was tardy; it had only up to
August 1, 2006 within which to file the same. The trial court therefore acted regularly in denying
PDB’s notice of appeal.

Since PDB’s Omnibus Motion for Reconsideration and for New Trial was filed late and the 15-
day period within which to appeal expired without PDB filing the requisite notice of appeal, it
follows that its right to appeal has been foreclosed; it may no longer question the trial court’s
Decision in any other manner. "Settled is the rule that a party is barred from assailing the
correctness of a judgment not appealed from by him."34 The "presumption that a party who did
not interject an appeal is satisfied with the adjudication made by the lower court"35 applies to it.
There being no appeal taken by PDB from the adverse judgment of the trial court, its Decision
has become final and can no longer be reviewed, much less reversed, by this Court. "Finality of
a judgment or order becomes a fact upon the lapse of the reglementary period to appeal if no
appeal is perfected, and is conclusive as to the issues actually determined and to every matter
which the parties might have litigated and have x x x decided as incident to or essentially
connected with the subject matter of the litigation, and every matter coming within the legitimate
purview of the original action both in respect to matters of claim and of defense." 36 And "[i]n this
jurisdiction, the rule is that when a judgment becomes final and executory, it is the ministerial
duty of the court to issue a writ of execution to enforce the judgment;"37 "execution will issue as
a matter of right x x x (a) when the judgment has become final and executory; (b) when the
judgment debtor has renounced or waived his right of appeal; [or] (c) when the period for appeal
has lapsed without an appeal having been filed x x x."38

Neither can the Court lend a helping hand to extricate PDB from the effects of its mistake;
indeed, PDB erred more than once during the course of the proceedings. For one, it did not
attempt to set right its failure to appear during pre-trial, which prompted the court to allow
petitioners to present evidence ex parte and obtain a favorable default judgment. Second,
assuming for the sake of argument that it timely filed its Omnibus Motion for Reconsideration
and for New Trial, it nonetheless violated the ten-day requirement on the notice of hearing under
Section 5 of Rule 15. Third, even before it could be notified of the trial court’s resolution of its
omnibus motion on September 14, 2006 – assuming it was timely filed, it filed a notice of appeal
on September 7, 2006 – which thus implies that it abandoned its bid for reconsideration and
new trial, and instead opted to have the issues resolved by the CA through the remedy of
appeal. If so, then there is no Omnibus Motion for Reconsideration and for New Trial that the
trial court must rule upon; its August 30, 2006 Order thus became moot and academic and
irrelevant. "[W]here [an action] or issue has become moot and academic, there is no justiciable
controversy, so that a declaration thereon would be of no practical use or value."39

Fourth, instead of properly pursuing its appeal to free itself from the unfavorable effects of the
trial court’s denial of its notice of appeal, PDB chose with disastrous results to gamble on its
Omnibus Motion for Reconsideration and for New Trial by filing an original Petition for Certiorari
to assail the trial court’s denial thereof. Time and again, it has been said that certiorari is not a
substitute for a lost appeal, especially if one’s own negligence or error in one’s choice of remedy
occasioned such loss.40

What remains relevant for this Court to resolve, then, is the issue relative to the trial court’s
October 6, 2006 Order – which denied the motion to quash the writ of execution – and the
August 31, 2006 and October 9, 2006 writs of execution. The Court observes that the October
6, 2006 Order and the August 31, 2006 and October 9, 2006 writs of execution were set aside
and quashed merely as a necessary consequence of the CA’s directive in the Amended
Decision for the trial court to hear and rule on the merits of PDB’s Omnibus Motion for
Reconsideration and for New Trial. Other than this singular reason, the CA would have
sustained them, and this is clear from a reading of both its original May 31, 2007 Decision and
its subsequent Amended Decision. Now, since the Court has herein declared that PDB’s
omnibus motion may not be considered for being tardy and for having been superseded by the
bank’s filing of a notice of appeal, then the CA’s original pronouncement regarding the October
6, 2006 Order and the August 31, 2006 and October 9, 2006 writs of execution should
necessarily be reinstated as well.

In light of the above conclusions, the Court finds no need to further discuss the other issues
raised by the parties. They are rendered irrelevant by the above pronouncements.

WHEREFORE, the Petition is GRANTED. The assailed July 28, 2009 Amended Decision and
August 23, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 01317-MIN are
REVERSED and SET ASIDE. The Regional Trial Court of General Santos City, Branch 37 is
ORDERED to proceed with the execution ofits June 15, 2006 Decision in Civil Case No. 6474.

SO ORDERED.

THIRD DIVISION

G.R. No. 200469, January 15, 2018

PHILIPPINE SAVINGS BANK, Petitioner, v. JOSEPHINE L. PAPA, Respondent.

DECISION

MARTIRES, J.:

This is a petition for review on certiorari seeking to reverse and set aside the 21 July 2011
Decision1 and the 1 February 2012 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
112611, which affirmed the 14 October 2009 Decision3 and the 14 January 2010 Order of the
Regional Trial Court of Makati City, Branch 65 (RTC), in Civil Case No. 09-545, which in turn
reversed and set aside the 23 December 2008 Decision4 of the Metropolitan Trial Court of
Makati City, Branch 65 (MeTC) in Civil Case No. 90987.

THE FACTS

On 30 March 2006, petitioner Philippine Savings Bank (PSB) filed before the MeTC a
complaint5 for collection of sum of money against respondent Josephine L. Papa (Papa). In its
complaint, PSB alleged that Papa obtained a flexi-loan with a face amount of P207,600.00,
payable in twenty-four (24) monthly installments of P8,650.00 with interest at 38.40% per
annum. For the said loan, Papa executed a promissory note dated 26 July 2005. PSB further
alleged that the promissory note provides additional charges in case of default, to wit: Three
percent (3%) late payment charge per month of the total amount until the amount is fully paid;
Twenty-Five percent (25%) Attorney's Fees, but not less than P5,000.00; Ten percent (10%)
liquidated damages, but not less than P1,000.00; and costs of suit. When the obligation fell due,
Papa defaulted in her payment. PSB averred that as of 27 March 2006, Papa's total obligation
amounted to P173,000.00; and that despite repeated demands, Papa failed to meet her
obligation.

On 26 October 2006, Papa filed her Answer.6 She alleged that PSB had no cause of action
against her as her liability had already been extinguished by the several staggered payments
she made to PSB, which payments she undertook to prove. She likewise claimed that there was
no basis for the interest and damages as the principal obligation had already been paid.

During the trial on the merits, PSB introduced in evidence a photocopy of the promissory
note,7 which the MeTC admitted despite the vehement objection by Papa. Meanwhile, Papa
chose to forego with the presentation of her evidence and manifested she would instead file a
memorandum.

After the parties had submitted their respective memoranda, the case was submitted for
decision.

The MeTC Ruling

On 23 December 2008, the MeTC rendered a decision in favor of PSB and against Papa. The
MeTC was convinced that PSB was able to establish its cause of action against Papa by
preponderance of evidence. It also emphasized the fact that other than her bare allegation,
Papa never adduced any evidence regarding the payments she had allegedly made. The
MeTC, however, deemed it equitable to award interest at the rate of twelve percent (12%) per
annum only instead of the stipulated interest, penalty, and charges. The dispositive portion of
the MeTC Decision provides:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendant

JOSEPHINE L. PAPA to pay plaintiff the amount of P173,000.00 plus interest at the rate of 12%
per annum from February 9, 2006 until the whole amount is fully paid; the amount of P20,000.00
as and by way of attorney's fees; and the costs.

SO ORDERED.8

Papa moved for reconsideration, but the same was denied by the MeTC in its Order, dated 14
May 2009.

Aggrieved, Papa elevated an appeal before the RTC.

The RTC Ruling

In its decision, dated 14 October 2009, the RTC reversed and set aside the MeTC decision. The
trial court ruled that PSB failed to prove its cause of action due to its failure to prove the
existence and due execution of the promissory note. It opined that Papa's apparent admission
in her Answer could not be taken against her as, in fact, she denied any liability to PSB, and she
never admitted the genuineness and due execution of the promissory note. It explained that the
fact that Papa interposed payment as a mode of extinguishing her obligation should not
necessarily be taken to mean that an admission was made regarding the contents and due
execution of the promissory note; specifically the amount of the loan, interests, mode of
payment, penalty in case of default, as well as other terms and conditions embodied therein.
The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The decision
dated December 23, 2008 in Civil Case No. 09-945 is reversed and set aside.

SO ORDERED.9

On 10 November 2009, PSB filed its motion for reconsideration,10 wherein it admitted that it
received the copy of the 14 October 2009 RTC decision on 26 October 2009.

In its opposition to PSB's motion for reconsideration, Papa posited, among others, that the RTC
decision had already attained finality. Papa explained that although PSB filed the motion for
reconsideration on 10 November 2009, it appears that service of the said motion was made one
(1) day late as PSB availed of a private courier service instead of the modes of service
prescribed under the Rules of Court. As such, PSB's motion for reconsideration is deemed not
to have been made on the date it was deposited to the private courier for mailing but rather on
11 November 2009, the date it was actually received by Papa.

In its Order, dated 14 January 2010, the RTC denied PSB's motion for reconsideration
ratiocinating that its 14 October 2009 decision had already attained finality, among others.

Aggrieved, PSB filed a petition for review under Rule 42 of the Revised Rules of Court before
the CA.

In her comment,11 Papa reiterated her position that the 14 October 2009 RTC decision had
already attained finality.

The CA Ruling

In its assailed decision, dated 21 July 2011, the CA affirmed the 14 October 2009 decision and
the 14 January 2010 order of the RTC.

The appellate court ruled that the RTC decision had already attained finality due to PSB's failure
to serve on Papa a copy of its motion for reconsideration within the prescribed period. The
appellate court noted that in its motion for reconsideration, PSB did not offer any reasonable
explanation why it availed of private courier service instead of resorting to the modes
recognized by the Rules of Court.

The appellate court further agreed with the RTC that PSB failed to prove its cause of action. It
concurred with the RTC that Papa made no admission relative to the contents and due
execution of the promissory note; and that PSB failed to prove that Papa violated the terms and
conditions of the promissory note, if any.

The dispositive portion of the assailed decision reads:

WHEREFORE, premises considered, the Decision of the Makati Regional Trial Court, Branch
65 dated 14 October 2009 and its subsequent Order dated 14 January 2010 denying petitioner's
Motion for Reconsideration in Civil Case No. 09-545 are hereby AFFIRMED in toto. With costs
against the petitioner.

SO ORDERED.12
PSB moved for reconsideration, but the same was denied by the CA in its resolution, dated 1
February 2012.

Hence, this petition.

THE ISSUES

I.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR

WHEN IT DISMISSED PETITIONER'S APPEAL BY REASON OF PURE TECHNICALITY
THEREBY PREJUDICING THE SUBSTANTIAL RIGHT OF THE PETITIONER TO RECOVER
THE UNPAID LOAN OF THE RESPONDENT.

II.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR

WHEN IT AFFIRMED THE LOWER COURTS DECISION DATED 14 OCTOBER 2009 ON THE
GROUND THAT PETITIONER FAILED TO PROVE ITS CAUSE OF ACTION WHEN IT
FAILED TO PRESENT THE ORIGINAL OF THE PROMISSORY NOTE THEREBY FAILING
TO ESTABLISH THE DUE EXISTENCE AND EXECUTION OF THE PROMISSORY NOTE.

III.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR

WHEN IT DISMISSED PETITIONER'S APPEAL RESULTING IN UNJUST ENRICHMENT IN
FAVOR OF THE RESPONDENT.13

Stated differently, PSB argues that the appellate court erred when it ruled that the RTC decision
had already attained finality; and that the appellate court erred when it ruled that it failed to
prove its cause of action despite Papa's admission regarding the existence of the loan.

OUR RULING

PSB insists that it timely filed its motion for reconsideration. It stresses that the records of the
case would disclose that it personally filed the subject motion before the RTC on 10 November
2009, or the last day of the 15-day prescriptive period. PSB also claims that, although it
deviated from the usual mode of service as prescribed by the Rules of Court when it served the
copy of the aforesaid motion by private courier service, there was still effective service upon
Papa considering that she received the motion for reconsideration through her counsel, on 11
November 2009, and nine (9) days prior to its intended hearing date. Additionally, PSB
contends that the timeliness of the filing of the motion for reconsideration should not be
reckoned from the date of the actual receipt by the adverse party, but on the actual receipt
thereof by the RTC, pointing out that filing and service of the motion are two different matters.

PSB further argues that, notwithstanding the said deviation, a liberal construction of the rules is
proper under the circumstances and that the Court has the power to suspend its own rules
especially when there appears a good and efficient cause to warrant such suspension.

These arguments deserve scant consideration.

PSB is correct that filing and service are distinct from each other. Indeed, filing is the act of
presenting the pleading or other paper to the clerk of court; whereas, service is the act of
providing a party with a copy of the pleading or paper concerned.14
Nevertheless, although they pertain to different acts, filing and service go hand-in-hand and
must be considered together when determining whether the pleading, motion, or any other
paper was filed within the applicable reglementary period. Precisely, the Rules require every
motion set for hearing to be accompanied by proof of service thereof to the other parties
concerned; otherwise, the court shall not be allowed to act on it,15 effectively making such
motion as not filed.

The kind of proof of service required would depend on the mode of service used by the litigant.
Rule 13, Section 13 of the Rules of Court provides:

SECTION 13. Proof of Service. - Proof of personal service shall consist of a written admission of
the party served, or the official return of the server, or the affidavit of the party serving,
containing a full statement of the date, place and manner of service. If the service is by
ordinary mail, proof thereof shall consist of an affidavit of the person mailing of facts
showing compliance with section 7 of this Rule. If service is made by registered mail, proof
shall be made by such affidavit and the registry receipt issued by the mailing office. The registry
return card shall be filed immediately upon its receipt by the sender, or in lieu thereof the
unclaimed letter together with the certified or sworn copy of the notice given by the postmaster
to the addressee. [emphasis supplied]

In some decided cases, the Court considered filing by private courier as equivalent to filing by
ordinary mail.16 The Court opines that this pronouncement equally applies to service of
pleadings and motions. Hence, to prove service by a private courier or ordinary mail, a party
must attach an affidavit of the person who mailed the motion or pleading. Further, such affidavit
must show compliance with Rule 13, Section 7 of the Rules of Court, which provides:

Section 7. Service by mail. — Service by registered mail shall be made by depositing the copy
in the post office in a sealed envelope, plainly addressed to the party or his counsel at his office,
if known, otherwise at his residence, if known, with postage fully prepaid, and with instructions
to the postmaster to return the mail to the sender after ten (10) days if undelivered. If no
registry service is available in the locality of either the senders or the addressee, service
may be done by ordinary mail. [emphasis supplied]

This requirement is logical as service by ordinary mail is allowed only in instances where no
registry service exists either in the locality of the sender or the addressee.17 This is the only
credible justification why resort to service by ordinary mail or private courier may be allowed.

In this case, PSB admits that it served the copy of the motion for reconsideration to Papa's
counsel via private courier. However, said motion was not accompanied by an affidavit of the
person who sent it through the said private messengerial service. Moreover, PSB's explanation
why it resorted to private courier failed to show its compliance with Rule 13, Section 7. PSB's
explanation merely states:

Greetings:

Kindly set the instant motion on 20 November 2009 at 8:30 o'clock in the morning or soon
thereafter as matter and counsel may be heard. Copy of this pleading was served upon
defendant's counsel by private registered mail for lack of material time and personnel to effect
personal delivery. 18

Very clearly, PSB failed to comply with the requirements under Rule 13, Section 7 for an
effective service by ordinary mail. While PSB explained that personal service was not effected
due to lack of time and personnel constraints, it did not offer an acceptable reason why it
resorted to "private registered mail" instead of by registered mail. In particular, PSB failed to
indicate that no registry service was available in San Mateo, Rizal, where the office of Papa's
counsel is situated, or in Makati City, where the office of PSB's counsel is located.
Consequently, PSB failed to comply with the required proof of service by ordinary mail. Thus,
the RTC is correct when it denied PSB's motion for reconsideration, which, for all intents and
purposes, can be effectively considered as not filed.

Since PSB's motion for reconsideration is deemed as not filed, it did not toll the running of the
15-day reglementary period for the filing of an appeal; and considering that PSB's appeal was
filed only after the expiration of the 15-day period on 10 November 2009, such appeal has not
been validly perfected. As such, the subject 14 October 2009 decision of the RTC had already
attained finality as early as 11 November 2009.

It is well-settled that judgments or orders become final and executory by operation of law and
not by judicial declaration. The finality of a judgment becomes a fact upon the lapse of the
reglementary period of appeal if no appeal is perfected or no motion for reconsideration or new
trial is filed. The court need not even pronounce the finality of the order as the same becomes
final by operation of law.19

At this juncture, the Court stresses that the bare invocation of "the interest of substantial justice"
or, in this case, "good or efficient case" is not a magic wand that will automatically compel this
Court to suspend procedural rules. Procedural rules are not to be belittled or dismissed simply
because their non-observance may have prejudiced a party's substantive rights. Like all rules,
they are required to be followed except only for the most persuasive of reasons when they may
be relaxed to relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed.20

Time and again, the Court has reiterated that rules of procedure, especially those prescribing
the time within which certain acts must be done, are absolutely indispensable to the prevention
of needless delays and to the orderly and speedy discharge of business.21 While procedural
rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to
facilitate the adjudication of cases. The relaxation of procedural rules in the interest of justice
was never intended to be a license for erring litigants to violate the rules with impunity. Liberality
in the interpretation and application of the rules can be invoked only in proper cases and under
justifiable causes and circumstances. While litigation is not a game of technicalities, every case
must be prosecuted in accordance with the prescribed procedure to ensure an orderly and
speedy administration of justice.22

Considering that the RTC decision had already attained finality, there is no longer need to
discuss whether the RTC and the CA erred in ruling that PSB failed to prove its cause of action.
A decision that has acquired finality becomes immutable and unalterable, and may no longer be
modified in any respect, even if the modification is meant to correct erroneous conclusions of
fact and law, and whether it be made by the court that rendered it or by the Highest Court of the
land. Any act which violates this principle must immediately be struck down.23

WHEREFORE, the present petition is DISMISSED for lack of merit. The 21 July 2011 Decision
and the 1 February 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 112611
are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 182814 July 15, 2015

LIGAYA MENDOZA and ADELIA MENDOZA, Petitioners,

vs.
THE HONORABLE COURT OF APPEALS (EIGHT DIVISION), HONORABLE JUDGE
LIBERATO C. CORTEZ and BANGKO KABAYAN (Formerly IBAAN RURAL BANK,
INC.,) Respondents.

DECISION

PEREZ, J.:

This is a Petition for Certiorari1 pursuant to Rule 65 of the Revised Rules of Court, assailing the
29 November 2007 Decision2 rendered by the Eighth Division of the Court of Appeals in CA-
G.R. SP No. 86745. In its assailed decision, the appellate court affirmed the 28 May 2003
Order3 of the Regiorial Trial Court (RTC) of Batangas City, Branch 8 denying the Opposition to
the Motion for Execution filed by petitioners Ligaya Mendoza and Adelia Mendoza.

In a Resolution4 dated 28 April 2008, the Court of Appeals denied the Motion for
Reconsideration of the petitioners.

The Facts

On 4 September 1997, petitioners obtained a loan from private respondent Bangko Kabayan
(formerly Ibaan Rural Bank) in the amount of ₱12,000,000.00, as evidenced by a Promissory
Note5 executed by petitioners.

As security for the said obligation, petitioners executed a Deed of Real Estate Mortgage
(REM)6 over 71 parcels of land registered under their names and located in Mabini, Batangas.
Subsequently, however, petitioners incurred default and therefore the loan obligation became
due and demandable.

On 21 May 1998, private respondent filed a Complaint for Judicial Foreclosure7 of the REM over
the subject properties before the RTC of Batangas City.

After petitioners admitted the material allegations in the Complaint, the RTC, on 7 March 2002,
rendered a Judgment8 on the Pleadings, the dispositive portion of which reads: "WHEREFORE,
on the basis of the pleadings, judgment is hereby rendered in favor of the [private respondent]
and against the [petitioners] ordering the [petitioners] to pay to the court or to [private
respondent] within a period of ninety (90) days from the entry of this judgment the amounts
hereunder set forth, and in default of such payment, the [properties] shall be sold at the public
auction to satisfy this judgment:

a. The principal sum of TWELVE MILLION PESOS (₱12,000,000.00) with interest

thereon at the rate of 30% per annum and penalty computed from September 4, 1997
until fully paid;

b. Attorney's fees equivalent to 10% of the total amount due, and cost of suit.9
After petitioners failed to timely interpose an appeal or a motion for reconsideration, private
respondent filed a Motion for Execution to enforce the above judgment which was duly opposed
by the petitioners on the ground that they were not duly served with a copy of the R TC
Decision. It was argued by the petitioners that it was only on 13 June 2002 that their counsel
was able to receive a copy of the said judgment prompting them to immediately file a Notice of
Appeal on the following day, 14 June 2002.

On 28 May 2003 the RTC issued an Order10 denying due course to petitioners' Notice of Appeal
for being filed out of time. The court a quo declared that petitioners' counsel was negligent in
handling her mails and that negligence is binding upon petitioners. Accordingly, the RTC
forthwith . directed the issuance of the motion for execution, to wit:

WHEREFORE, the [c]ourt declares that the [petitioners'] notice of appeal cannot be given due
course as having been filed out of time, and the opposition to the motion for execution is hereby
DENIED. Accordingly, let the corresponding writ of execution issue.11

In an Order12 dated 13 July 2004, the RTC denied petitioners' Motion for Reconsideration and
thereby ordered the Sheriff to proceed with the sale of the foreclosed properties at the public
auction, thus:

WHEREFORE, the [petitioners'] Motion for Reconsideration is hereby DENIED and, accordingly
–

The Order of this [c]ourt dated May 28, 2003; the writ of execution issued on September 25,
2003; and the order dated October 20, 2003 directing the Sheriff of this [c]ourt to proceed with
the sale at public auction of the mortgaged properties subject matter of this case remain
undisturbed and shall be implemented.

Sheriff Rosalinda G. Aguado shall proceed without further delay with the sale [and] execution of
the mortgaged properties.13

On Certiorari, the Court of Appeals affirmed the assailed RTC Orders after finding that there
was a valid service of the notice of judgment to petitioners' counsel as attested by the
postmaster who enjoys the presumption of regularity in the performance of his official duty and
which presumption was not satisfactorily rebutted by the petitioners in the instant14 case.

Similarly ill-fated was petitioners' Motion for Reconsideration which was denied by the Court of
Appeals in a Resolution15 dated 28 April 2008.

Arguing that the Court of Appeals gravely abused its discretion in rendering the assailed
Decision, petitioners filed this instant Petition for Certiorari seeking the reversal of the appellate
court's decision and resolution on the following grounds:

I.

WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, THE HONORABLE

COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION WHEN IT AFFIRMED THE FINDING OF THE HONORABLE
REGIONAL TRIAL COURT OF BATANGAS, BRANCH 8 THAT THERE WAS VALID SERVICE
OF THE NOTICE OF JUDGMENT DATED 7 MARCH . 2002, INSPITE OF THE
OVERWHELMING PIECES OF EVIDENCE TO THE CONTRARY SINCE THE SECURITY
GUARD ASSIGNED IN THE LOBBY OF THE LPL MANSIONS WAS NOT AUTHORIZED TO
RECEIVE ANY MAIL MATTERS OF THE PETITIONERS' COUNSEL OF RECORD ATTY.
MINERVA C. GENOVEA.
 II.

WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS THE HONORABLE

COURT, ERRED AND COMMITTED GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION IN RULING THAT ATTY. MINERY A C. GENOVEA
IS AT FAULT SINCE SHE FAILED TO ADOPT MEASURES TO ENSURE NOTICES AND
DOCUMENTS INTENDED FOR HER WILL BE DULY RECEIVED BY HER OR HER STAFF.

III.

WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, IT COMMITTED GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JUDRISDICTION
WHEN IT UPHELD THE DECISION OF THE HONORABLE REGIONAL TRIAL COURT
PRESIDING JUDGE .WHEN THE LATTER PRECIPITATELY DENIED DUE COURSE [TO]
THE NOTICE OF APPEAL SEASONABLY FILED BY THE PETITIONERS ON 14 JUNE 2002
OR ONE (1) DAY FOLLOWING ACTUAL RECEIPT OF THE JUDGEMENT (sic) DATED 7
MARCH 2002 BY THE PETITIONERS.

IV.

GRANTING ARGUENDO, THAT INDEED THERE WAS VALID SERVICE OF JUDGMENT ON

THE PETITIONERS, STILL THE HONORABLE COURT HAS THE POWER AND DISCRETION
TO EXTEND THE PERIOD FOR FILING THE RECORD ON APPEAL IN THE INTEREST OF
JUSTICE; BESIDES AS REVEALED AND BASED ON RECORDS OF THE CASE, IT IS APP
ARENT THAT THE JUDGMENT WAS RENDERED THROUGH A MERE MOTION ON
JUDGMENT ON THE PLEADINGS, WHICH WAS FROWNED UPON BY NO LEES THAN THIS
HONORABLE COURT, PROPHETICALLY EMPHASIZED IN ITS NUMEROUS
PRONOUNCEMENTS, THAT SHORT-CUTS IN JUDICIAL PROCESSES ARE TO BE A
VOIDED WHERE THEY IMPEDE RATHER THAN PROMOTE A JUDICIOUS DISPENSATION
OF JUSTICE.

V.

WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, THE HONORABLE

COURT COMMITTED GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF DISCRETION WHEN IT STATED THAT NOTICE SENT TO THE
COLLABORATING COUNSEL ATTY. JUANITO L. VELASCO, JR. WAS VALID SERVICE
UPON THE PETITIONERS.

VI.

WITH DUE RESPECT TO THE HONORABLE OF APPEALS, THE HONORABLE COURT

ERRED AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT FAILEP TO
RULE THAT NO VALID EXECUTION CAN BE EFFECTED SEEING AS THERE WAS
ABSENCE OF ACTUAL NOTICE TO HEREIN PETITIONERS.16

The Court's Ruling

The crux of the entire controversy is nestled on the issue of whether or not there was a valid
service of the 7 March 2002 RTC Judgment to the petitioners.

As a rule where a party appears by attorney in an action or proceeding in a court of record, all
notices or orders required to be given therein must be given to the attorney of record.
Accordingly, notices to counsel should be properly sent to his address of record, and, unless the
counsel files a notice o f change of address, his official address remains to be that his address
of

Record.17

There is no question that in this case, petitioners' counsel was able to receive a copy of the
judgment, as evidenced by the Certification18 issued by the Postmaster General. As borne by
the Certification, the said copy of the judgment was duly delivered to the address on record of
the petitioners' counsel at 2/F LPC Mansion, 122 L.P. Leviste St., Salcedo Village, Makati City
and was received by Daniel Soriano, the security guard on 15 March 2002.

While petitioners impliedly admitted the fact that the security guard in the building where their
counsel's office is located received the copy of the judgment, they argued, however, that such
receipt is not valid under the law,. a contention which pulled the rug from under their feet
exposing the utter frailty of their position. In Balgami v. Court of Appeals,19 the Court instructed
the counsels to device a system to ensure that official communications would be promptly
received by them, lest, they will be chargeable with negligence, thus:

x x x. The law office is mandated to adopt and arrange matters in order to ensure that official or
judicial communications sent by mail would reach the lawyer assigned to the case. The court
has time and again emphasized that the negligence of the clerks, which adversely affect the
cases handled by lawyers, is binding upon the latter. The doctrinal rule is that negligence of the
counsel binds the client because, otherwise, there would never be an end to a suit so long as
new counsel could be employed who could allege and [prove] that prior counsel had not been
sufficiently diligent, or experienced, or learned.

Evidently, petitioners' counsel was wanting on this respect. Not only did petitioners' counsel fail
to device a system for the prompt and efficient receipt of mails intended for her, she also failed
to ensure that she could be notified of the decision as soon as possible. As a practicing lawyer,
petitioners' counsel should have been more circumspect in monitoring official communications
intended for her so as to avoid situations like this, where a mail matter was inexplicably lost after
delivery thereby running the risk of losing a client's case on technicality. Petitioners' counsel
cannot hide behind the security guard's negligence to shield her even professional negligence in
an effort to seek reversal of a decision that has long attained finality. It bears stressing that a
decision had become final and executory without any party perfecting an appeal or filing a
motion for reconsideration within the reglementary period. It was only months after its finality
that questions assailing the Decision were raised.

Neither can petitioners exempt themselves or their properties from the operation of a final and
executory judgment by harping on their counsel's · negligence. Jurisprudence is replete with
pronouncements that clients are bound by the actions of their counsel in the conduct of their
case. If it were otherwise, and a lawyer's mistake or negligence was admitted as a reason for
the opening of the case, there would be no end to litigation so long as counsel had not been
sufficiently diligent or experienced or learned.20 The only exception to the general rule is when
the counsel's actuations are gross or palpable, resulting in serious injustice to client, that courts
should accord relief to the party.21Indeed, if the error or negligence of the counsel did not result
in the deprivation of due process to the client, nullification of the decision grounded on grave
abuse of discretion is not warranted.22 The instant case does not fall within the exception since
petitioners were duly given their day in court.

Furthermore, it is a well-settled principle in this jurisdiction that a client is bound by the action of
his counsel in the conduct of the case and cannot be heard to complain that the result might
have been different had he · proceeded differently.23 Every counsel has the implied authority to
do all acts which are necessary or, at least, incidental to the prosecution and management of
the suit in behalf of his client. And, any act performed by · counsel within the scope of his
general and implied authority is, in the eyes of law, regarded as the act of the client himself and
consequently, the mistake or negligence of the client's counsel may result in the rendition of
unfavorable judgment against him.24To rule otherwise would result to a situation that every
defeated party, in order to salvage his case, would just have to claim neglect or mistake on the
part of his counsel as a ground for reversing an adverse judgment. There would be no end to
litigation if this were allowed as every shortcoming of counsel could be the subject of challenge
of his client through another counsel who, if he is also found wanting, would likewise be
disowned by the same client through another counsel, and so on ad infinitum. This would render
court proceedings indefinite, tentative and subject to reopening at any time by the mere
subterfuge of replacing counsel.25

In fact, this is not the first time that the Court dismissed the claim of litigants that they were
denied their day in court by conveniently invoking the mistake of their counsel in their vain effort
to seek reversal of a judgment that has long become final and executory. In Juani v.
Alarcon,26 We struck down the ploy of the petitioner to prolong the court process by unduly
harping on his counsel's negligence to evade a valid obligation, thus:

Clearly, this is an instance where the due process routine vigorously pursued by Bienvenido
Juani and his successor-in-interest is but a clear-cut afterthought meant to delay the settlement
of uncomplicated legal dispute. Aside from clogging the court dockets, the strategy is deplorably
a common curse resorted to by losing litigants in the hope of evading manifest obligations. This
Court will ever be vigilant to nip [in] the bud any dilatory maneuver calculated to defeat or
frustrate the ends of justice, fair play and the prompt .implementation of final and executory
judgments.

Truly, a litigant bears the responsibility to monitor the status of his case,. for no prudent party
leaves the fate of his case entirely in the hands of his lawyer.1âwphi1 It is the client's duty to be
in contact with his lawyer from time to time in order to be informed of the progress and
developments of his case; hence, .to merely rely on the bare reassurance of his lawyer that
everything is being taken care of is not enough.27 Where the party failed to act with prudence
and diligence, its plea that it was not accorded the right to due process cannot elicit this court's
approval or even sympathy.28

When a party lost the right to appeal on account of his own and his counsel's negligence, and,
as a result of which, a judgment has attained. finality, such party cannot thereafter unduly
burden the courts by endlessly pursuing the due process routine in . an effort to frustrate the
prompt implementation of final and executory judgment. It must be emphasized that . the instant
case stemmed from a simple judicial foreclosure proceeding involving several parcels of land
where the trial court, after finding that petitioners admitted the material allegations in the
complaint, rendered a judgment on the pleadings.

Litigation must end and terminate sometime and somewhere, and it is essential to an effective
administration of justice that once a judgment has · become final the issue or the cause involved
therein should be laid to rest. This doctrine of finality of judgment is grounded on fundamental
consideration of public policy and sound practice. In fact, nothing is more settled in law than that
once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer
be modified in any respect, even if the modification is meant to correct what is perceived to be
an erroneous conclusion of fact and law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest court of the land.29 Just as a
losing party has the right to file an appeal within the' prescribed period, the winning party has
the correlative right to enjoy the finality of the resolution of his case by the execution and
satisfaction of the judgment, which is the "life of the law."30 To frustrate it by dilatory scheme on
the part of the losing party is to frustrate all efforts, time and expenditure of the courts. It is in the
best interest of justice that this court write finis to this litigation.31
WHEREFORE, premises considered, the petition is hereby DISMISSED. The assailed Decision
dated 29 November 2007 and · Resolution dated 28 April 2008 of the Court of Appeals in CA-
G.R. SP No. 86745 are hereby AFFIRMED.

SO ORDERED.

THIRD DIVISION

January 27, 2016

G.R. No.180993

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE LAND REGISTRATION

AUTHORITY, Petitioner,
vs.
RAYMUNDO VIAJE, ET AL., Respondents.

DECISION

REYES, J.:

The Republic of the Philippines (Republic) filed the present Petition for Review
on Certiorari1 under Rule 45 of the Rules of Court assailing the Court of Appeals' (CA)
Decision2 dated November 28, 2007 in CA-G.R. SP No. 90102, dismissing its petition
for certiorari.

Facts

The Office of the Solicitor General (OSG), on behalf of the Republic and as represented by the
Land Registration Authority (LRA), filed on July 10, 2000 a complaint3 for Cancellation of Title
and Reconveyance with the Regional Trial Court (RTC) of Trece Martires City, docketed as Civil
Case No. TM-1001 and raffled to Branch 23. The action mainly sought the nullity of the transfer
certificate of title (TCT) individually issued in the name of the defendants therein, for having
been issued in violation of law and for having dubious origins. The titles were allegedly derived
from TCT No. T-39046 issued on October 1, 1969. TCT No. T-39046, in turn, was derived from
Original Certificate of Title (OCT) No. 114 issued on March 9, 1910 covering 342,842 square
meters. The Republic alleged, among others, that OCT No. 114 and the documents of transfer
of TCT No. T-39046 do not exist in the records of the Registers of Deeds of Cavite and Trece
Martires City.4

The OSG entered its appearance on August 7, 2001 and deputized Atty. Artemio C. Legaspi
and the members of the LRA legal staff to appear in Civil Case No. TM-1001, with the OSG
exercising supervision and control over its deputized counsel.5 The OSG also requested that
notices of hearings, orders, decisions and other processes be served on both the OSG and the
deputized counsel.6 The Notice of Appearance, however, stated that "only notices of orders,
resolutions, and decisions served on him will bind the party represented."7 Subsequently, Atty.
Alexander N.V. Acosta (Atty. Acosta) of the LRA entered his appearance as deputized LRA
lawyer, pursuant to the OSG Letter8dated August 7, 2001.9 The letter also contained the
statement, "only notices of orders, resolutions and decisions served on him will bind the
[Republic], the entity, agency and/or official represented."10

Thereafter, several re-settings of the pre-trial date were made due to the absence of either the
counsel for the Republic or the counsel of one of the defendants, until finally, on April 11, 2003,
the RTC dismissed the complaint due to the non-appearance of the counsel for the Republic.11

The OSG filed a motion for reconsideration,12 which was granted by the RTC in its Order dated
July 22, 2003.13 Pre-trial was again set and re-set, and on January 23, 2004, the RTC finally
dismissed Civil Case No. TM-1001 with prejudice.14 The order reads, in part:

WHEREFORE, in view of the above, and upon motion of the defendants through counsel, Atty.
Eufracio C. Fortuno, let this case be, as it is hereby, DISMISSED with prejudice.

SO ORDERED.15

Having been informed of this, the OSG forthwith filed a Manifestation and Motion,16 informing
the RTC that Atty. Acosta was not given notice of the pre-trial schedule. The OSG also stated
that such lack of notice was pursuant to a verbal court order that notice to the OSG is sufficient
notice to the deputized counsel, it being the lead counsel, and that they were not formally
notified of such order. The OSG argued that its deputized counsel should have been notified of
the settings made by the trial court as it is not merely a collaborating counsel who appears with
an OSG lawyer during hearing; rather, its deputized counsel appears in behalf of the OSG and
should be separately notified. Aside from this, the OSG pointed out that it particularly requested
for a separate notice for the deputy counsel.17

The RTC denied the OSG’s Manifestation and Motion in its Order18 dated May 31, 2004, from
which the OSG filed a Notice of Appeal,19 which was given due course by the
RTC.20 Subsequently, the RTC, on motion of the defendants, issued Order21 dated October 4,
2004 recalling its previous order that gave due course to the OSG’s appeal. The ground for the
recall was the OSG’s failure to indicate in its notice of appeal the court to which the appeal was
being directed.22 The OSG moved for the reconsideration23 of the order but it was denied by the
RTC on March 16, 2005.24

Thus, the OSG filed a special civil action for certiorari with the CA. On November 28, 2007, the
CA rendered the assailed decision dismissing the OSG’s petition on the grounds that the
petition was filed one day late and the RTC did not commit any grave abuse of discretion when
it dismissed Civil Case No. TM-1001 and the OSG’s notice of appeal. It ruled that the OSG’s
failure to indicate in its notice of appeal the court to which the appeal is being taken violated
Section 5, Rule 41 of the Rules of Civil Procedure, which provides, among others, that "[t]he
notice of appeal shall x x x specify the court to which the appeal is being taken x x x." The CA
also ruled that the OSG cannot claim lack of due process when its deputized counsel was not
served a notice of the pre-trial schedule. The CA disagreed with the OSG’s contention that its
deputized counsel should have been notified. According to the CA, the OSG remains the
principal counsel of the Republic and it is service on them that is decisive, and having received
the notice of pre-trial, it should have informed its deputized counsel of the date. Aside from this,
the authority given by the OSG to its deputized counsel did not include the authority to enter into
a compromise agreement, settle or stipulate on facts and admissions, which is a part of the pre-
trial; hence, even if the deputized counsel was present, the case would still be dismissed.25
The OSG is now before the Court arguing that:

THE APPELLATE COURT ERRED IN NOT HOLDING THAT RESPONDENT JUDGE

COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE COMPLAINT DESPITE
THE JUSTIFIED FAILURE OF THE DEPUTIZED COUNSEL TO ATTEND THE PRE-TRIAL.

THE APPELLATE COURT ERRED IN NOT HOLDING THAT RESPONDENT JUDGE

COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE NOTICE OF APPEAL.26

The OSG contends that the rule that notice to the OSG is sufficient notice to its deputized
counsel applies only to collaborating counsels who appear with the lead counsel. In case of
deputized counsels, a separate notice is necessary since they appear in behalf of the OSG.
Also, the OSG pointed out that it specifically requested that separate notices be furnished to its
deputized counsel.27

The OSG also argues that the RTC committed grave abuse of discretion when it dismissed the
notice of appeal despite the fact that the defendants did not ask for its recall and merely sought
clarification as to which court the case was being appealed to. Moreover, the OSG maintains
that its inadvertence is not fatal as it did not create any ambiguity as to which court the appeal
shall be made, and that the interest of due process should prevail over an inadvertent violation
of procedural rules.28

Ruling of the Court

The power of the OSG to deputize legal officers of government departments, bureaus, agencies
and offices to assist it in representing the government is well settled. The Administrative Code of
1987 explicitly states that the OSG shall have the power to "deputize legal officers of
government departments, bureaus, agencies and offices to assist the Solicitor General and
appear or represent the Government in cases involving their respective offices, brought before
the courts and exercise supervision and control over such legal officers with respect to such
cases."29 But it is likewise settled that the OSG’s deputized counsel is "no more than the
‘surrogate’ of the Solicitor General in any particular proceeding" and the latter remains
the principal counsel entitled to be furnished copies of all court orders, notices, and
decisions.30 In this case, records show that it was the OSG that first entered an appearance in
behalf of the Republic; hence, it remains the principal counsel of record. The appearance of the
deputized counsel did not divest the OSG of control over the case and did not make the
deputized special attorney the counsel of record.31 Thus, the RTC properly acted within bounds
when it relied on the rule that it is the notice to the OSG that is binding.32

Nonetheless, the OSG also pointed out that it specifically requested the RTC to likewise furnish
its deputized counsel with a copy of its notices. Records show that the deputized counsel also
requested that copies of notices and pleadings be furnished to him.33 Despite these requests, it
was only the OSG that the RTC furnished with copies of its notices. It would have been more
prudent for the RTC to have furnished the deputized counsel of its notices. All the same, doing
so does not necessarily clear the OSG from its obligation to oversee the efficient handling of the
case. And even if the deputized counsel was served with copies of the court’s notices, orders
and decisions, these will not be binding until they are actually received by the OSG. More so in
this case where the OSG’s Notice of Appearance and its Letter deputizing the LRA even
contained the caveat that it is only notices of orders, resolutions and decisions served on
the OSG that will bind the Republic, the entity, agency and/or official represented.34 In
fact, the proper basis for computing a reglementary period and for determining whether a
decision had attained finality is service on the OSG.35 As was stated in National Power
Corporation v. National Labor Relations Commission:36
The underlying justification for compelling service of pleadings, orders, notices and decisions on
the OSG as principal counsel is one and the same. As the lawyer for the government or the
government corporation involved, the OSG is entitled to the service of said pleadings and
decisions, whether the case is before the courts or before a quasi-judicial agency such
as respondent commission. Needless to say, a uniform rule for all cases handled by the
OSG simplifies procedure, prevents confusion and thus facilitates the orderly
administration of justice.37 (Emphasis ours)

The CA, therefore, cannot be faulted for upholding the RTC’s dismissal of Civil Case No. TM-
1001 due to the failure of the counsel for the Republic to appear during pre-trial despite due
notice.

The Court, likewise, cannot attribute error to the CA when it affirmed the RTC’s recall of its order
granting the OSG’s notice of appeal.1awp++i1 The RTC simply applied the clear provisions of
Section 5, Rule 41 of the Rules of Court, which mandated that a "notice of appeal shall x x
x specify the court to which the appeal is being taken x x x."

Nevertheless, under the circumstances obtaining in this case, the Court resolves to relax the
stringent application of the rules, both on the matter of service of notices to the OSG and its
deputized counsel, and on the notice of appeal. Such relaxation of the rules is not
unprecedented.

In Cariaga v. People of the Philippines,38 the Court ruled that rules of procedure must be viewed
as tools to facilitate the attainment of justice such that its rigid and strict application which
results in technicalities tending to frustrate substantial justice must always be avoided.39 In Ulep
v. People of the Philippines,40 meanwhile, the Court ordered the remand of the case to the
proper appellate court, stating that the "petitioner’s failure to designate the proper forum for her
appeal was inadvertent," and that "[t]he omission did not appear to be a dilatory tactic on her
part."41

Similarly in this case, the OSG’s omission should not work against the Republic. For one, the
OSG availed of the proper remedy in seeking a review of the RTC’s order of dismissal by
pursuing an ordinary appeal and filing a notice of appeal, albeit without stating where the appeal
will be taken. For another, it is quite elementary that an ordinary appeal from a final
decision/order of the RTC rendered in the exercise of its original jurisdiction can only be
elevated to the CA under Rule 41 of the Rules of Court.42 Moreover, as in Ulep, the OSG's
failure to designate where the appeal will be taken was a case of inadvertence and does not
appear to be a dilatory tactic on its part. More importantly, the OSG 's omission should not
redound to the Republic's disadvantage for it is a well-settled principle that the Republic is never
estopped by the mistakes or error committed by its officials or agents.43

Finally, the subject matter of the case before the RTC - the recovery by the Republic of a
342,842-sq m property in Cavite covered by an allegedly non-existent title - necessitates a full-
blown trial. To sustain the peremptory dismissal of Civil Case No. TM-1001 due to the
erroneous appreciation by the Republic's counsel of the applicable rules of procedure is an
abdication of the State's authority over lands of the public domain.44 Under the Regalian
doctrine, "all lands of the public domain belong to the State, and the State is the source of any
asserted right to ownership in land and charged with the conservation of such patrimony." The
Court, therefore, must exercise its equity jurisdiction and relax the rigid application of the rules
where strong considerations of substantial justice are manifest.45

WHEREFORE, the petition is GRANTED. The Decision dated November 28, 2007 of the Court
of Appeals in CA-G.R. SP No. 90102 is REVERSED and SET ASIDE. Civil Case No. TM-I 001
and all its records are REMANDED to the Regional Trial Court of Trece Martires City, Branch
23, for further disposition on the merits.
The Office of the Solicitor General and its deputized counsel/s are advised to be more
circumspect in the performance of their duties as counsels for the Republic of the Philippines.

SO ORDERED.

FIRST DIVISION

G.R. No. 206528, June 28, 2016

PHILIPPINE ASSET GROWTH TWO, INC. (SUCCESSOR-IN-INTEREST OF PLANTERS

DEVELOPMENT BANK) AND PLANTERS DEVELOPMENT BANK, Petitioners, v. FASTECH
SYNERGY PHILIPPINES, INC. (FORMERLY FIRST ASIA SYSTEM TECHNOLOGY, INC.),
FASTECH MICROASSEMBLY & TEST, INC., FASTECH ELECTRONIQUE, INC., AND
FASTECH PROPERTIES, INC., Respondents.

DECISION

PERLAS-BERNABE, J.:

For the Court's resolution is a petition for review on certiorari1 assailing the Decision2 dated
September 28, 2012 and the Resolution3 dated March 5, 2013 of the Court of Appeals (CA) in
CA-G.R. SP No. 122836 which: (a) approved the Rehabilitation Plan4 of respondents Fastech
Synergy Philippines, Inc. (formerly First Asia System Technology, Inc.) (Fastech Synergy),
Fastech Microassembly & Test, Inc. (Fastech Microassembly), Fastech Electronique, Inc.
(Fastech Electronique), and Fastech Properties, Inc. (Fastech Properties; collectively,
respondents); (b) enjoined petitioner Planters Development Bank (PDB) from effecting the
foreclosure of respondents' properties during the implementation thereof; and (c) remanded the
case to the Regional Trial Court (RTC) of Makati City, Branch 149 (RTC-Makati) to supervise its
implementation.

The Facts

On April 8, 2011, respondents filed a verified Joint Petition5 for corporate rehabilitation
(rehabilitation petition) before the RTC-Makati, with prayer for the issuance of a Stay or
Suspension Order,6 docketed as SP Case No. M-7130. They claimed that: (a) their business
operations and daily affairs are being managed by the same individuals;7 (b) they share a
majority of their common assets;8 and (c) they have common creditors and common
liabilities.9chanrobleslaw

Among the common creditors listed in the rehabilitation petition was PDB,10 which had earlier
filed a petition11 for extrajudicial foreclosure of mortgage over the two (2) parcels of land,
covered by Transfer Certificate of Title (TCT) Nos. T-45810212 and T-45810313 and registered in
the name of Fastech Properties (subject properties),14 listed as common assets of respondents
in the rehabilitation petition.15 The foreclosure sale was held on April 13, 2011, with PDB
emerging as the highest bidder.16 Respondents claimed that this situation has impacted on their
chance to recover from the losses they have suffered over the years, since the said properties
are being used by Fastech Microassembly and Fastech Electronique17 in their business
operations, and a source of significant revenue for their owner-lessor, Fastech
Properties.18Hence, respondents submitted for the court's approval their proposed Rehabilitation
Plan,19 which sought: (a) a waiver of all accrued interests and penalties; (b) a grace period of
two (2) years to pay the principal amount of respondents' outstanding loans, with the interests
accruing during the said period capitalized as part of the principal, to be paid over a twelve (12)-
year period after the grace period; and (c) an interest rate of four percent (4%) and two percent
(2%) per annum (p.a.) for creditors whose credits are secured by real estate and chattel
mortgages, respectively.20chanrobleslaw

On April 19, 2011, the RTC-Makati issued a Commencement Order with Stay Order,21 and
appointed Atty. Rosario S. Bernaldo as Rehabilitation Receiver, which the latter subsequently
accepted.22chanrobleslaw

After the initial hearing on May 18, 2011, and the filing of the comments/oppositions on the
rehabilitation petition,23 the RTC-Makati gave due course to the said petition, and, thereafter,
referred the same to the court-appointed Rehabilitation Receiver, who submitted in due time her
preliminary report,24 opining that respondents may be rehabilitated, considering that their assets
appear to be sufficient to cover their liabilities, but reserved her comment to the Rehabilitation
Plan's underlying assumptions, financial goals, and procedures to accomplish said goals after
the submission of a revised rehabilitation plan as directed by the RTC-Makati,25cralawred which
respondents subsequently complied.26chanrobleslaw

After the creditors had filed their respective comments and/or oppositions to the revised
Rehabilitation Plan, and respondents had submitted their consolidated reply27 thereto, the court-
appointed Rehabilitation Receiver submitted her comments,28 opining that respondents may be
successfully rehabilitated, considering the sufficiency of their assets to cover their liabilities and
the underlying assumptions, financial projections and procedures to accomplish said goals in
their Rehabilitation Plan.29chanrobleslaw

The RTC-Makati Ruling

In a Resolution30 dated December 9, 2011, the RTC-Makati dismissed the rehabilitation petition
despite the favorable recommendation of its appointed Rehabilitation Receiver. It found the
facts and figures submitted by respondents to be unreliable in view of the disclaimer of opinion
of the independent auditors who reviewed respondents' 2009 financial statements,31 which it
considered as amounting to a "straightforward unqualified adverse opinion."32 In the same vein,
it did not give credence to the unaudited 2010 financial statements as the same were mere
photocopied documents and unsigned by any of respondents' responsible officers.33 It also
observed that respondents added new accounts and/or deleted/omitted certain
accounts.34 Furthermore, it rejected the revised financial projections as the bases for which
were not submitted for its evaluation on the ground of confidentiality.35chanrobleslaw

Aggrieved, respondents appealed36 to the CA, with prayer for the issuance of a temporary
restraining order (TRO) and/or a writ of preliminary injunction (WPI), docketed as CA-G.R. SP
No. 122836.

The Proceedings Before the CA

In a Resolution dated January 24, 2012, the CA issued a TRO37 so as not to render moot and
academic the case before it in view of PDB's pending Ex-Parte Petition for Issuance of a Writ of
Possession over the subject properties before the RTC of Biñan, Laguna, docketed as LRC
Case No. B-5141.38 Thereafter, the CA issued a WPI39 on March 22, 2012.

On April 30, 2012, the court-appointed Rehabilitation Receiver submitted a

manifestation40 before the CA, maintaining that the rehabilitation of respondents is viable since
the financial projections and procedures set forth to accomplish the goals in their Rehabilitation
Plan are attainable.41chanrobleslaw
After the creditors and respondents had filed their respective comments and reply to the
manifestation, the CA rendered a Decision42 dated September 28, 2012 (September 28, 2012
Decision), reversing and setting aside the RTC-Makati ruling.43 It ruled that the RTC-Makati
grievously erred in disregarding the report/opinion of the Rehabilitation Receiver that
respondents may be successfully rehabilitated, despite being highly qualified to make an
opinion on accounting in relation to rehabilitation matters.44 It likewise observed that the RTC-
Makati failed to distinguish the difference between an adverse or negative opinion and a
disclaimer or when an auditor cannot formulate an opinion with exactitude for lack of sufficient
data.45 Finally, the CA declared that the Rehabilitation Plan is feasible and should be approved,
finding that respondents would be able to meet their obligations to their creditors within their
operating cash profits and other assets without disrupting their business operations, which will
be beneficial to their creditors, employees, stockholders, and the economy.46chanrobleslaw

Accordingly, the CA reinstated the rehabilitation petition, approved respondents' Rehabilitation

Plan, and remanded the case to the RTC-Makati to supervise its implementation. Considering
that respondents' creditors are placed in equal footing as a necessary consequence, it
permanently enjoined PDB from "effecting the foreclosure" of the subject properties during the
implementation of the Rehabilitation Plan.47chanrobleslaw

Dissatisfied, PDB filed a motion for reconsideration48 which was, however, denied in a
Resolution49 dated March 5, 2013 (March 5, 2013 Resolution).

In the interim, DivinaLaw entered50 its appearance as the new lead counsel of PDB, in
collaboration51 and with the conformity of its counsel of record, Janda Asia & Associates.52 On
April 3, 2013, DivinaLaw, on behalf of petitioner Philippine Asset Growth Two, Inc. (PAGTI), filed
a Motion for Substitution of Parties (motion for substitution),53 averring that PAGTI had acquired
PDB's claims and interests in the instant case, hence, should be substituted as a party therein.

The Proceedings Before the Court

On April 18, 2013, PAGTI and PDB (petitioners), represented by DivinaLaw, filed the instant
petition, claiming that PDB received a copy of the March 5, 2013 Resolution on April 3,
2013.54chanrobleslaw

On July 10, 2013, respondents filed their Urgent Motion to Dismiss Petition for Review
on Certiorari for Being Filed Out of Time55 (urgent motion), positing that contrary to petitioners'
claim that PDB received notice of the March 5, 2013 Resolution on April 3, 2013, its counsel,
Janda Asia & Associates, already received a Copy of the said resolution on March 12, 2013.
Thus, petitioners only had until March 27, 2013 to file a petition for review on certiorari before
the Court, and the petition filed on April 18, 2013 was filed out of time.56chanrobleslaw

Meanwhile, the Court required respondents to file their comment57 to the petition, and
subsequently directed petitioners to submit their comment on respondents' urgent motion, and
reply to the latter's comment.58chanrobleslaw

In their Comment,59 respondents prayed for the dismissal of the petition and reiterated their
stand that the same was filed out of time, arguing that the receipt of the March 5, 2013
Resolution on March 12, 2013 by Janda Asia & Associates, which remained as collaborating
counsel of PDB, binds petitioners and started the running of the fifteen (15)-day period within
which to file a petition for review on certiorari before the Court. Thus, the petition filed on April
18, 2013 was filed beyond the reglementary period.60 Respondents likewise maintained the
viability of the rehabilitation plan, which will benefit not only their employees, but their
stockholders, creditors, and the general public.61chanrobleslaw
For their part, petitioners contended62 that: (a) the date of receipt of petitioners' lead
counsel, i.e., DivinaLaw's receipt of the March 5, 2013 Resolution, should be the reckoning
point of the fifteen (15)-day period within which to file the instant petition, since only the lead
counsel is entitled to service of court processes,63 citing the case of Home Guaranty
Corporation v. R-II Builders, Inc.;64 and (b) the CA erred in not upholding the dismissal of the
rehabilitation petition despite the insufficiency of the Rehabilitation Plan which was based on
financial statements that contained misleading statements, and financial projections that are
mere unfounded assumptions/speculations.65chanrobleslaw

Thereafter, respondents filed a Manifestation and Update (Re: Compliance to [the CA] Decision
dated September 28, 2012)66 before the Court, stating that it had achieved the
EBITDA67 requirement of the Rehabilitation Plan and made quarterly payments in favor of the
bank and non-bank creditors from December 28, 2014 to September 28, 2015, totalling
P27,119,481.79.68 However, the amount of P8,364,836.53 in favor of PDB was not accepted,
and is being held by respondents.69chanrobleslaw

The Issues Before the Court

The essential issues for the Court's resolution are: (a) whether or not the petition for review
on certiorariwas timely filed; and (b) the Rehabilitation Plan is feasible.
The Court's Ruling

I.
The Court first resolves the procedural issue anent the timeliness of the petition's filing.

It is a long-standing doctrine that where a party is represented by several counsels, notice to

one is sufficient, and binds the said party.70 Notice to any one of the several counsels on record
is equivalent to notice to all, and such notice starts the running of the period to appeal
notwithstanding that the other counsel on record has not received a copy of the decision or
resolution.71chanrobleslaw

In the present case, PDB was represented by both Janda Asia & Associates and DivinaLaw. It
was not disputed that Janda Asia & Associates, which remained a counsel of record, albeit, as
collaborating counsel, received notice of the CA's March 5, 2013 Resolution on March 12, 2013.
As such, it is from this date, and not from DivinaLaw's receipt of the notice of said resolution on
April 3, 2013 that the fifteen (15)-day period72 to file the petition for review on certiorari before
the Court started to run.

Hence, petitioners only had until March 27, 2013 to file a petition for review on certiorari before
the Court, and the petition filed on April 18, 2013 was filed out of time. Notably, there is no
showing that the CA had already resolved PAGTI's motion for substitution;73 hence, it remained
bound by the proceedings and the judgment rendered against its transferor, PDB.

Generally, the failure to perfect an appeal in the manner and within the period provided for by
law renders the decision appealed from final and executory,74 and beyond the competence of
the Court to review. However, the Court has repeatedly relaxed this procedural rule in the higher
interest of substantial justice. In Barnes v. Padilla,75 it was held that:ChanRoblesVirtualawlibrary
[A] final and executory judgment can no longer be attacked by any of the parties or be modified,
directly or indirectly, even by the highest court of the land.

However, this Court has relaxed this rule in order to serve substantial justice[,] considering (a)
matters of life, liberty, honor or property, (b) the existence of special or compelling
circumstances, (c) the merits of the case, (d) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules, (e) a lack of any showing that the
review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly
prejudiced thereby.76chanroblesvirtuallawlibrary
After a meticulous scrutiny of this case, the Court finds that the unjustified rehabilitation of
respondents, by virtue of the CA ruling if so allowed to prevail, warrants the relaxation of the
procedural rule violated by petitioners in the higher interest of substantial justice. The reasons
therefor are hereunder explained.

II.

Rehabilitation is statutorily defined under Republic Act No. 10142,77 otherwise known as the
"Financial Rehabilitation and Insolvency Act of 2010" (FRIA), as
follows:ChanRoblesVirtualawlibrary
Section 4. Definition of Terms. - As used in this Act, the term: x x x x

(gg) Rehabilitation shall refer to the restoration of the debtor to a condition of successful
operation and solvency, if it is shown that its continuance of operation is economically feasible
and its creditors can recover by way of the present value of payments projected in the plan,
more if the debtor continues as a going concern than if it is immediately liquidated. (Emphasis
supplied)
Case law explains that corporate rehabilitation contemplates a continuance of corporate life and
activities in an effort to restore and reinstate the corporation to its former position of
successful operation and solvency, the purpose being to enable the company to gain a
new lease on life and allow its creditors to be paid their claims out of its earnings.78 Thus,
the basic issues in rehabilitation proceedings concern the viability and desirability of continuing
the business operations of the distressed corporation,79 all with a view of effectively restoring it
to a state of solvency or to its former healthy financial condition through the adoption of a
rehabilitation plan.

III.

In the present case, however, the Rehabilitation Plan failed to comply with the minimum
requirements, i.e.: (a) material financial commitments to support the rehabilitation plan; and (b)
a proper liquidation analysis, under Section 18, Rule 3 of the 2008 Rules of Procedure on
Corporate Rehabilitation80 (Rules), which Rules were in force at the time respondents'
rehabilitation petition was filed on April 8, 2011:ChanRoblesVirtualawlibrary
Section 18. Rehabilitation Plan. - The rehabilitation plan shall include (a) the desired business
targets or goals and the duration and coverage of the rehabilitation; (b) the terms and conditions
of such rehabilitation which shall include the manner of its implementation, giving due regard to
the interests of secured creditors such as, but not limited, to the non-impairment of their security
liens or interests; (c) the material financial commitments to support the rehabilitation plan;
(d) the means for the execution of the rehabilitation plan, which may include debt to equity
conversion, restructuring of the debts, dacion en pago or sale or exchange or any disposition of
assets or of the interest of shareholders, partners or members; (e) a liquidation analysis
setting out for each creditor that the present value of payments it would receive under
the plan is more than that which it would receive if the assets of the debtor were sold by
a liquidator within a six-month period from the estimated date of filing of the petition; and
(f) such other relevant information to enable a reasonable investor to make an informed decision
on the feasibility of the rehabilitation plan. (Emphases supplied)
The Court expounds.

A. Lack of Material Financial Commitment to Support the Rehabilitation Plan.

A material financial commitment becomes significant in gauging the resolve, determination,

earnestness, and good faith of the distressed corporation in financing the proposed
rehabilitation plan. This commitment may include the voluntary undertakings of the
stockholders or the would-be investors of the debtor-corporation indicating their readiness,
willingness, and ability to contribute funds or property to guarantee the continued successful
operation of the debtor-corporation during the period of rehabilitation.81chanrobleslaw

In this case, respondents' Chief Operating Officer, Primo D. Mateo, Jr., in his executed Affidavit
of General Financial Condition82 dated April 8, 2011, averred that respondents will not require
the infusion of additional capital as he, instead, proposed to have all accrued penalties, charges,
and interests waived, and a reduced interest rate prospectively applied to all respondents'
obligations, in addition to the implementation of a two (2)-year grace period.83 Thus, there
appears to be no concrete plan to build on respondents' beleaguered financial position through
substantial investments as the plan for rehabilitation appears to be pegged merely on financial
reprieves. Anathema to the true purpose of rehabilitation, a distressed corporation cannot be
restored to its former position of successful operation and regain solvency by the sole strategy
of delaying payments/waiving accrued interests and penalties at the expense of the creditors.

The Court also notes that while respondents have substantial total assets, a large portion of the
assets of Fastech Synergy84 and Fastech Properties85 is comprised of noncurrent assets,86 such
as advances to affiliates which include Fastech Microassembly,87 and investment properties
which form part of the common assets of Fastech Properties, Fastech Electronique, and
Fastech Microassembly.88 Moreover, while there is a claim that unnamed customers have made
investments by way of consigning production equipment, and advancing money to fund
procurement of various equipment intended to increase production capacity,89this can hardly be
construed as a material financial commitment which would inspire confidence that the
rehabilitation would turn out to be successful. Case law holds that nothing short of legally
binding investment commitment/s from third parties is required to qualify as a material financial
commitment.90Here, no such binding investment was presented.

B. Lack of Liquidation Analysis.

Respondents likewise failed to include any liquidation analysis in their Rehabilitation Plan. The
total liquidation assets and the estimated liquidation return to the creditors, as well as the fair
market value vis-a-vis the forced liquidation value of the fixed assets were not shown. As such,
the Court could not ascertain if the petitioning debtor's creditors can recover by way of the
present value of payments projected in the plan, more if the debtor continues as a going
concern than if it is immediately liquidated. This is a crucial factor in a corporate rehabilitation
case, which the CA, unfortunately, failed to address.

C. Effect of Non-Compliance.

The failure of the Rehabilitation Plan to state any material financial commitment to support
rehabilitation, as well as to include a liquidation analysis, renders the CA's considerations for
approving the same, i.e., that: (a) respondents would be able to meet their obligations to their
creditors within their operating cash profits and other assets without disrupting their business
operations; (b) the Rehabilitation Receiver's opinion carries great weight; and (c) rehabilitation
will be beneficial for respondents' creditors, employees, stockholders, and the economy,91 as
actually unsubstantiated, and hence, insufficient to decree the feasibility of respondents'
rehabilitation. It is well to emphasize that the remedy of rehabilitation should be denied to
corporations that do not qualify under the Rules. Neither should it be allowed to corporations
whose sole purpose is to delay the enforcement of any of the rights of the creditors.

Even if the Court were to set aside the failure of the Rehabilitation Plan to comply with the
fundamental requisites of material financial commitment to support the rehabilitation and an
accompanying liquidation analysis, a review of the financial documents presented by
respondents fails to convince the Court of the feasibility of the proposed plan.
 IV.

The test in evaluating the economic feasibility of the plan was laid down in Bank of the
Philippine Islands v. Sarabia Manor Hotel Corporation92 (Bank of the Philippine Islands), to
wit:ChanRoblesVirtualawlibrary
In order to determine the feasibility of a proposed rehabilitation plan, it is imperative that a
thorough examination and analysis of the distressed corporation's financial data must be
conducted. If the results of such examination and analysis show that there is a real opportunity
to rehabilitate the corporation in view of the assumptions made and financial goals stated in the
proposed rehabilitation plan, then it may be said that a rehabilitation is feasible. In this accord,
the rehabilitation court should not hesitate to allow the corporation to operate as an on-going
concern, albeit under the terms and conditions stated in the approved rehabilitation plan. On the
other hand, if the results of the financial examination and analysis clearly indicate that there lies
no reasonable probability that the distressed corporation could be revived and that liquidation
would, in fact, better subserve the interests of its stakeholders, then it may be said that a
rehabilitation would not be feasible. In such case, the rehabilitation court may convert the
proceedings into one for liquidation.93chanroblesvirtuallawlibrary
In the recent case of Viva Shipping Lines, Inc. v. Keppel Philippines Mining, Inc.,94 the Court
took note of the characteristics of an economically feasible rehabilitation plan as opposed to an
infeasible rehabilitation plan:ChanRoblesVirtualawlibrary
Professor Stephanie V. Gomez of the University of the Philippines College of Law suggests
specific characteristics of an economically feasible rehabilitation plan:

a. The debtor has assets that can generate more cash if used in its daily operations
than if sold.

b. Liquidity issues can be addressed by a practicable business plan that will

generate enough cash to sustain daily operations.

c. The debtor has a definite source of financing for the proper and full
implementation of a Rehabilitation Plan that is anchored on realistic assumptions
and goals.

These requirements put emphasis on liquidity: the cash flow that the distressed corporation will
obtain from rehabilitating its assets and operations. A corporation's assets may be more than its
current liabilities, but some assets may be in the form of land or capital equipment, such as
machinery or vessels. Rehabilitation sees to it that these assets generate more value if used
efficiently rather than if liquidated.

On the other hand, this court enumerated the characteristics of a rehabilitation plan that is
infeasible:

chanRoblesvirtualLawlibrary

(a) the absence of a sound and workable business plan;

(b) baseless and unexplained assumptions, targets and goals;

(c) speculative capital infusion or complete lack thereof for the execution of the business
plan;
 (d) cash flow cannot sustain daily operations; and

(e) negative net worth and the assets are near full depreciation or fully depreciated.

In addition to the tests of economic feasibility, Professor Stephanie V. Gomez also suggests that
the Financial and Rehabilitation and Insolvency Act of 2010 emphasizes on rehabilitation that
provides for better present value recovery for its creditors.

Present value recovery acknowledges that, in order to pave way for rehabilitation, the creditor
will not be paid by the debtor when the credit falls due. The court may order a suspension of
payments to set a rehabilitation plan in motion; in the meantime, the creditor remains unpaid. By
the time the creditor is paid, the financial and economic conditions will have been changed.
Money paid in the past has a different value in the future. It is unfair if the creditor merely
receives the face value of the debt. Present value of the credit takes into account the interest
that the amount of money would have earned if the creditor were paid on time.

Trial courts must ensure that the projected cash flow from a business' rehabilitation plan allows
for the closest present value recovery for its creditors. If the projected cash flow is realistic and
allows the corporation to meet all its obligations, then courts should favor rehabilitation over
liquidation. However, if the projected cash flow is unrealistic, then courts should consider
converting the proceedings into that for liquidation to protect the
creditors.95chanroblesvirtuallawlibrary
A perusal of the 2009 audited financial statements shows that respondents' cash operating
position96 was not even enough to meet their maturing obligations. Notably, their current assets
were materially lower than their current liabilities,97 and consisted mostly of advances to related
parties in the case of Fastech Microassembly, Fastech Electronique, and Fastech
Properties.98 Moreover, the independent auditors recognized the absence of available historical
or reliable market information to support the assumptions made by the management to
determine the recoverable amount (value in use) of respondents' properties and
equipment.99chanrobleslaw

On the other hand, respondents' unaudited financial statements for the year 2010, and the
months of February and March 2011 were unaccompanied by any notes or explanation on how
the figures were arrived at. Besides, respondents' cash operating position remained insufficient
to meet their maturing obligations as their current assets are still substantially lower than their
current liabilities.100 The Court also notes the RTC-Makati's observation that respondents added
new accounts and/or deleted/omitted certain accounts,101 but failed to explain or justify the
same.

Verily, respondents' Rehabilitation Plan should have shown that they have enough serviceable
assets to be able to continue its business operation. In fact, as opposed to this objective, the
revised Rehabilitation Plan still requires "front load Capex spending" to replace common
equipment and facility equipment to ensure sustainability of capacity and capacity
robustness,102 thus, further sacrificing respondents' cash flow. In addition, the Court is hard-
pressed to see the effects of the outcome of the streamlining of respondents' manufacturing
operations on the carrying value of their existing properties and equipment.

In fine, the Rehabilitation Plan and the financial documents submitted in support thereof fail to
show the feasibility of rehabilitating respondents' business.
 V.

The CA's reliance on the expertise of the court-appointed Rehabilitation Receiver, who opined
that respondents' rehabilitation is viable, in order to justify its finding that the financial
statements submitted were reliable, overlooks the fact that the determination of the validity and
the approval of the rehabilitation plan is not the responsibility of the rehabilitation receiver, but
remains the function of the court. The rehabilitation receiver's duty prior to the court's approval
of the plan is to study the best way to rehabilitate the debtor, and to ensure that the value of the
debtor's properties is reasonably maintained; and afterapproval, to implement the rehabilitation
plan.103 Notwithstanding the credentials of the court-appointed rehabilitation receiver, the duty to
determine the feasibility of the rehabilitation of the debtor rests with the court. While the court
may consider the receiver's report favorably recommending the debtor's rehabilitation, it is not
bound thereby if, in its judgment, the debtor's rehabilitation is not feasible.

The purpose of rehabilitation proceedings is not only to enable the company to gain a new lease
on life, but also to allow creditors to be paid their claims from its earnings when so rehabilitated.
Hence, the remedy must be accorded only after a judicious regard of all stakeholders' interests;
it is not a one-sided tool that may be graciously invoked to escape every position of
distress.104 Thus, the remedy of rehabilitation should be denied to corporations whose
insolvency appears to be irreversible and whose sole purpose is to delay the enforcement of
any of the rights of the creditors, which is rendered obvious by: (a) the absence of a sound and
workable business plan; (b) baseless and unexplained assumptions, targets, and goals; and (c)
speculative capital infusion or complete lack thereof for the execution of the business plan,105 as
in this case.

VI.

In view of all the foregoing, the Court is therefore constrained to grant the instant petition,
notwithstanding the preliminary technical error as above-discussed. A distressed corporation
should not be rehabilitated when the results of the financial examination and analysis clearly
indicate that there lies no reasonable probability that it may be revived, to the detriment of its
numerous stakeholders which include not only the corporation's creditors but also the public at
large. In Bank of the Philippine Islands:106
Recognizing the volatile nature of every business, the rules on corporate rehabilitation have
been crafted in order to give companies sufficient leeway to deal with debilitating financial
predicaments in the hope of restoring or reaching a sustainable operating form if only to best
accommodate the various interests of all its stakeholders, may it be the corporation's
stockholders, its creditors, and even the general public.107chanroblesvirtuallawlibrary
Thus, the higher interest of substantial justice will be better subserved by the reversal of the CA
Decision. Since the rehabilitation petition should not have been granted in the first place, it is of
no moment that the Rehabilitation Plan is currently under implementation. While payments in
accordance with the Rehabilitation Plan were already made, the same were only possible
because of the financial reprieves and protracted payment schedule accorded to respondents,
which, as above-intimated, only works at the expense of the creditors and ultimately, do not
meet the true purpose of rehabilitation.

WHEREFORE, the petition is GRANTED. The Decision dated September 28, 2012 and the
Resolution dated March 5, 2013 of the Court of Appeals in CA-G.R. SP No. 122836 are
hereby REVERSED and SET ASIDE. Accordingly, the Joint Petition for corporate rehabilitation
filed by respondents Fastech Synergy Philippines, Inc. (formerly First Asia System Technology,
Inc.), Fastech Microassembly & Test, Inc., Fastech Electronique, Inc., and Fastech Properties,
Inc., before the Regional Trial Court of Makati City, Branch 149 in SP Case No. M-7130
is DISMISSED.

SO ORDERED.chanRoblesvirtualLawlibrary