G.R. No. 138758 - Chan vs. Court of Appeals

On 16 August 1995, the spouses Mario and Gregoria Geronimo entered into a Memorandum of Agreement with William P. Chan.
Under the agreement, Chan was engaged as their financial consultant to secure a loan from Banco Filipino, with the understanding that he would receive a “success fee” amounting to 10% of the approved loan amount.

Chan assisted the spouses by preparing their loan application and collecting the necessary supporting documents, which included Income Tax Returns, a Transfer Certificate of Title (used as collateral), and documents from the Sangguniang Bayan of Guiguinto concerning the road right-of-way of the respondents’ property.
As a result of these efforts, Banco Filipino approved and granted the spouses a loan amounting to ₱20,600,000.00.

Despite repeated demands, the respondents failed to pay the stipulated success fee of ₱2,060,000.00 to Chan.
Consequently, on 29 October 1996, Chan filed a complaint for collection of money before the Regional Trial Court (RTC) of Makati, Branch 145.

On 11 December 1997, the RTC ruled in favor of Chan and ordered the respondents to pay ₱2,060,000.00 jointly and severally, with interest starting at 6% per annum from 5 November 1996 (the filing date) and increasing to 12% per annum until fully paid, plus ₱50,000.00 for reasonable attorney’s fees.
On 20 January 1998, the respondents filed a Notice of Appeal with the RTC, but they failed to pay the corresponding legal fees as required.

Chan filed a Manifestation pointing out that the respondents’ Notice of Appeal was deficient because it was not accompanied by “proof of payment of the appellate court docket and other lawful fees” as stipulated by Sec. 4, Rule 41 of the 1997 Rules of Civil Procedure.
As a result, the trial court denied the appeal by issuing an order for non-compliance with the requisite payment.
On 18 February 1998, the respondents filed a Motion for Reconsideration of the dismissal, which was subsequently denied on 12 March 1998.

On 3 April 1998, the respondents filed a petition for review with the Court of Appeals, seeking reversal of the trial court orders.
Chan contended that, based on Sec. 1 of Rule 50 of the 1997 Rules of Civil Procedure, an appeal may be dismissed either on the court’s initiative or on motion of the appellee for failure to comply with fee payment requirements.
On 23 December 1998, the Court of Appeals granted the respondents’ petition, annulled the earlier orders (from 9 February and 12 March 1998), and ruled that payment of docket fees before the clerk of the lower court was non-mandatory. It further held that the appellant may instead pay the docket fee to the clerk of the appellate court based on Sec. 6, Rule 46 of the Revised Rules of Court, citing Dizon v. Encarnacion.

On 12 January 1999, Chan filed his Motion for Reconsideration of the 23 December 1998 decision, arguing that the appellate court’s reliance on provisions of the Revised Rules of Court was erroneous because those provisions were obsolete and had been superseded by the 1997 Rules of Civil Procedure.
On 20 April 1999, the Court of Appeals denied Chan’s Motion for Reconsideration, prompting the instant petition for certiorari under Rule 65.

Whether the respondents’ failure to pay the appellate docket and other lawful fees, as mandated by the 1997 Rules of Civil Procedure, was sufficient grounds for the dismissal of their appeal.
Whether the Court of Appeals erred in holding that the payment of docket fees was optional, i.e., that the fee could be paid either to the clerk of the lower court or the appellate court, contrary to the explicit requirements of Sec. 4, Rule 41 of the 1997 Rules of Civil Procedure.
Whether the appellate court improperly applied obsolete provisions from the Revised Rules of Court in lieu of the current 1997 Rules of Civil Procedure, thereby causing reversible error.