G.R. No. 174982 - Atilano II vs. Asaali

Petitioners, Jose Vicente Atilano II, Heirs of Carlos V. Tan (represented by Conrad K. Tan, Carlos K. Tan, Camilo Karl K. Tan, Carisa Rosenda T. Go, Nelida F. Atilano, and Isidra K. Tan), filed a certiorari petition challenging the dismissals by the Court of Appeals (CA).
The petition assailed the May 27, 2005 and September 6, 2006 Resolutions of the CA which dismissed their petition on the ground of failure to comply with certain procedural requirements.

In January 1990, private respondent Atlantic Merchandising, Inc. initiated an action for the revival of judgment against Zamboanga Alta Consolidated, Inc. (ZACI) at the Regional Trial Court (RTC) of Zamboanga City, Branch 17.
The RTC, in its January 31, 1991 Decision, revived an earlier judgment in Civil Case No. 3049 and ordered ZACI to pay P673,536.54 covering principal, interest, attorney’s fees, and costs, computed at 12% legal interest per annum.
A writ of execution was issued but returned unsatisfied, prompting respondent to proceed with the examination of ZACI’s debtors, among whom petitioners were included as stockholders.

During the examination proceedings, petitioners denied any liability related to unpaid stock subscriptions of ZACI.
Petitioners presented documentary evidence from the Securities and Exchange Commission (SEC) showing the incorporators’ subscriptions and paid-in capital as of February 20, 1988.
Despite the evidence, the RTC noted that ZACI had ceased operations as early as 1983 and that no updates emerged in the company books when inquired in 1992.
Relying on SEC records, the RTC found petitioners collectively indebted to ZACI in the aggregate amount of P750,000.00 by way of unpaid stock subscriptions.
The RTC subsequently issued an order (September 29, 2004 Decision) directing petitioners to settle their obligations with respect to the capital stock of ZACI, with their motion for reconsideration being denied on December 9, 2004.

Petitioners filed a petition for certiorari before the CA, challenging not just the RTC’s findings but also the procedural shortcomings that led to dismissals based on non-compliance.
The CA dismissed the petition on multiple procedural grounds, including:

Failure to attach certified true copies of the assailed RTC decisions and orders.
Only three out of four petitioners having signed the verification and certification of non-forum shopping.
The IBP Official Receipt Number of counsel being outdated per Bar Matter No. 287.
Deficiency in the docket and other fees amounting to P1,530.00.

Even though petitioners later sought reconsideration and substantially complied with the enumerated defects by paying the docket fee (albeit beyond the reglementary period), the CA reaffirmed its dismissal in its September 6, 2006 Resolution.

Whether the CA's outright dismissal of the certiorari petition solely on procedural grounds, despite petitioners' substantial compliance with the requirements, constitutes a denial of due process.
Whether the RTC erred in ordering petitioners—who were not parties to the primary civil action between ZACI and Atlantic Merchandising—to satisfy an alleged debt (unpaid stock subscriptions) based on SEC records and without a full adjudication of the substantive issues.
Whether the proper procedure under Section 43, Rule 39 of the Revised Rules of Court was disregarded, notably the requirement that a separate action be instituted against a third party who denies the indebtedness.