G.R. No. 155524 - Al-Amanah Islamic Investment Bank of the Philippines vs. Celebrity Travel and Tours, Inc.

Case Summary (G.R. No. 155524)

Factual Background: The OMA-BPE Arrangement and the Dishonored Managers Check

Sometime in 1988, the OMA and its BPE entered into a Memorandum of Agreement (MOA) with respondent Celebrity Travel and Tours, Incorporated for the 1998 Hajj pilgrimage. Under the arrangement, the respondent was to charter Philippine Airlines and Saudia Airlines flights and secure accommodations for Filipino-Muslim participants. The OMA was to provide the respondent the names of the pilgrims, while the respondent was to purchase and deliver the airline tickets to the pilgrims for the trip.

AIIB was designated as the official depository of the pilgrims’ funds. To implement the MOA, Debit Memorandum entries signed by OMA Director for Finance Yusup T. Mangoda and BPE Director Kharis B. Mikunug caused AIIB to issue Managers Check No. 001766 in the amount of P14,742,187 payable to the order of respondent, intended to cover the airfare, accommodations, and other fees.

Later, when OMA Director Mangoda received information that some pilgrims had paid directly to respondent for their plane fares and accommodations, he requested AIIB to stop payment of the managers check pending further verification. AIIB complied, resulting in the check’s dishonor. Respondent then sought OMA’s intervention for payment, but without success.

RTC Proceedings: Action for Sum of Money and Damages; Partial Judgment

Respondent filed a complaint on August 14, 1990 for sum of money and damages with the RTC of Makati against AIIB and the named directors, seeking collection of P5,969,428.88, plus interest and damages. Respondent prayed for: (a) P5,969,428.88 plus twelve percent (12%) annual interest counted from the date of first demand until fully paid; (b) P1,289,720.00 as aggregate consequential damages; (c) P1,000,000.00 as exemplary damages; (d) five percent (5%) of the aggregate amount due plus P75,000.00 as attorney’s fees; and (e) costs of suit.

The case was docketed as Civil Case No. 90-2270. After proceedings, the RTC rendered a decision on June 14, 1994 in favor of respondent, but only in the amount of P211,459.52. The RTC did not award interest, damages, or attorney’s fees, reasoning that the parties had given cause to the filing of the case and that AIIB was willing to pay interest at the onset.

CA Proceedings: Dismissal of AIIB’s Appeal on Brief; Modification Increasing the Award

Both parties appealed to the CA. AIIB’s appeal, however, was dismissed for failure to file its brief, per a CA resolution dated September 12, 1996. Subsequently, on March 31, 1999, the CA rendered a decision affirming the RTC, but with modification. The CA ordered AIIB to pay respondent P14,742,187, representing the value of the dishonored managers check, and directed payment of legal interest until fully paid. The CA dismissed the complaint against the other defendants Mikunug and Pundato.

The CA decision became final and executory, and Entry of Judgment was made on January 4, 2000. The records were remanded to the RTC for execution.

Execution Stage: Writ of Execution, Garnishment, and Lack of Prompt Opposition

Respondent moved for execution, which the RTC granted on April 4, 2001. Thereafter, a writ of execution and garnishment were issued. The sheriff served a notice of garnishment on AIIB’s manager, the Governor of the Bangko Sentral ng Pilipinas, and the Philippine Deposit Insurance Corporation.

AIIB did not respond or file pleadings to annul the writ of execution or garnishment. The RTC later ordered the case archived. AIIB, through the Office of the Government Corporate Counsel (OGCC), filed a Motion to Quash Writ of Execution and to Stop the Implementation of the Writ of Execution on September 5, 2001, and a supplemental motion on October 16, 2001. The grounds invoked were: (a) AIIB was deprived of its day in court due to gross and inexcusable negligence of its private retained counsel; (b) the CA decision was allegedly ambiguous as to the interest rate and the point from which it commenced to run; (c) the CA awarded P14,742,187, allegedly more than what respondent claimed (P5,969,428.88) in its complaint; and (d) respondent allegedly failed to pay required filing and docket fees for the alleged difference of P8,773,658 between the amount claimed and the CA award. AIIB argued that the RTC lacked jurisdiction to award the increased amount, rendering the CA award allegedly null and void.

RTC’s Orders Denying the Motions

Respondent opposed, contending that the RTC was merely implementing its own decision as modified by the CA, and that alleged errors in the CA’s award should have been addressed through further review, not through motions in the execution stage. Respondent also maintained that it had paid the requisite docket and filing fees for its complaint and that the RTC retained jurisdiction even after the CA modified the decision and increased the award. Respondent further asserted that the interest rate was 12% per annum, pursuant to Central Bank Circular No. 416, and that it should commence from demand. Respondent treated any error as an error of judgment, not a defect of jurisdiction.

On November 5, 2001, the RTC denied the motion and held, among others, that the legal rate of interest fixed by the CA should commence from judicial demand, or August 14, 1990. The RTC ruled that it had no authority to modify the CA’s decision and reduce the amount awarded, as its duty to implement the CA decision was ministerial. The RTC denied AIIB’s motion for reconsideration on March 1, 2002.

Petition for Certiorari in the CA: Grounds and CA’s Dismissal for Defective Appending of the Writ

AIIB, via OGCC, then filed a petition for certiorari under Rule 65 in the CA, docketed as CA-G.R. SP No. 70937, seeking to nullify the RTC’s November 5, 2001 and March 1, 2002 orders and the writ of execution issued. AIIB argued that the RTC gravely abused its discretion amounting to lack or excess of jurisdiction by allowing execution of a decision allegedly null and void, by ruling that interest should be computed from filing of the complaint, and by proceeding despite the absence of a plain, speedy, and adequate remedy except the special civil action. It also sought a temporary restraining order and writ of preliminary injunction to avoid irreparable effects.

On June 25, 2002, the CA dismissed the petition. The CA’s dismissal rested on a technical but determinative procedural defect: the petitioner appended a photocopy of the writ of execution instead of a certified true or duplicate original copy, which the CA considered mandatory under Section 3, Rule 46, in relation to Section 1, Rule 65 of the 1997 Rules of Civil Procedure. AIIB moved for reconsideration, arguing it had appended certified copies of the RTC orders at issue and that the photocopy of the writ was merely a supporting paper. The CA denied reconsideration on September 25, 2002, noting that AIIB again failed to append the required certified true or duplicate original copy even in its reconsideration motion.

Issue Before the Supreme Court

The Supreme Court identified the sole issue as whether the CA erred in dismissing the petition outright due to AIIB’s failure to append a certified true or duplicate original copy of the writ of execution.

The Parties’ Positions

AIIB argued that the petition’s subject matter in the CA was limited to the RTC’s orders dated November 5, 2001 and March 1, 2002, not the writ of execution itself. It asserted it complied with the certification requirements by attaching certified copies of the assailed RTC orders. AIIB contended that the photocopy of the writ of execution was only a supporting relevant paper and that the CA should not have dismissed outright but instead should have required compliance in the interest of substantial justice and fair play. AIIB relied on Cadayona v. Court of Appeals.

Respondent countered that, based on the petition’s allegations and prayers, AIIB challenged not only the RTC orders but also the writ of execution itself, and sought prohibition and injunctive relief to stop enforcement of the writ.

Supreme Court’s Treatment: Determining the Subject Matter and Enforcing the Rule’s Text

The Court ruled against AIIB on the main procedural question. It held that in determining the petition’s subject matter, the CA must consider all material allegations and reliefs prayed for. The Court found that the petition sought nullification of the writ of execution, not merely the RTC orders, and that AIIB prayed for prohibition and a writ of preliminary injunction to enjoin enforcement of the writ of execution and the two RTC orders. The Court also rejected AIIB’s claim that it did not intend the writ of execution to be the subject of the petition as inconsistent with the petition’s averments and petitory clause.

Given that the petition challenged the writ of execution, the Court held that under Section 1, Rule 65 (second paragraph), in relation to Section 3, Rule 46, AIIB was mandated to append a certified true or duplicate original copy of the writ. Failure to append such copy warranted dismissal. The Court further observed that even the reconsideration motion did not cure the omission, thus leaving no basis for faulting the CA for applying the Rules’ plain language.

Relaxation of the Rules in the Interest of Substantial Justice; Remand for Merits

Although the Court

Case Syllabus (G.R. No. 155524)

Al-Amanah Islamic Investment Bank of the Philippines (AIIB) (formerly Philippine Amanah Bank) filed a petition for review on certiorari seeking the nullification of a Court of Appeals Resolution dismissing its CA-G.R. SP No. 70937 petition and the denial of its motion for reconsideration.
The respondent Celebrity Travel and Tours, Inc. opposed the petition and argued that the appellate court’s outright dismissal was proper.

Parties and Procedural Posture

The controversy originated as a civil action for sum of money and damages filed by Celebrity Travel and Tours, Inc. in the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 90-2270.
The RTC ruled in favor of the respondent Celebrity Travel and Tours, Inc., but awarded only P211,459.52, and denied interest, damages, and attorneys’ fees.
Both parties appealed to the Court of Appeals, docketed as CA-G.R. CV No. 46269.
The Court of Appeals affirmed the RTC decision with modification, ordering the petitioner bank to pay P14,742,187 with legal interest until full payment, and dismissed the complaint against Mikunug and Pundato.
The Court of Appeals decision became final and executory; Entry of Judgment was made on January 4, 2000, and the case records were remanded to the RTC.
The respondent filed a motion for a writ of execution, which the RTC granted on April 4, 2001.
The RTC issued the writ of execution and the sheriff served a notice of garnishment on the petitioner’s manager, the Governor of the Bangko Sentral ng Pilipinas, and the Philippine Deposit Insurance Corporation.
The petitioner did not file any pleading to annul the writ or garnishment until it moved on September 5, 2001 to quash the writ of execution and stop its implementation, followed by a supplemental motion on October 16, 2001.
The RTC denied the motion and supplemental motion on November 5, 2001, and later denied the motion for reconsideration on March 1, 2002.
The petitioner then filed a Rule 65 petition for certiorari and prohibition with the Court of Appeals, assailing the RTC orders of November 5, 2001 and March 1, 2002, as well as the writ of execution.
The Court of Appeals dismissed the petition on June 25, 2002 due to the petitioner’s failure to append a certified true or duplicate original copy of the writ of execution, and denied reconsideration on September 25, 2002.
The petitioner assailed the dismissal in the Supreme Court, arguing that the writ of execution was only a supporting paper and that dismissal was overly technical.

Key Factual Allegations

The Office of the Muslim Affairs (OMA) supervised the orderly conduct of pilgrimages to Mecca, Saudi Arabia, under Executive Order No. 122-A.
One OMA office, the Bureau of Pilgrimage and Endowment (BPE), administered the annual Muslim pilgrimage to Mecca.
In 1988, the OMA and the BPE entered into a Memorandum of Agreement (MOA) with the respondent, under which the respondent would charter Philippine Airlines and Saudia Airlines flights and secure accommodations for Filipino-Muslim participants in the 1998 Hajj Pilgrimage.
The OMA would provide the respondent the names of the pilgrims, and the respondent would purchase and deliver the airline tickets to the pilgrims.
The petitioner bank was designated as the official depository of the pilgrims’ funds.
A Debit Memorandum signed by OMA Director for Finance Yusup T. Mangoda and BPE Director Kharis B. Mikunug resulted in the petitioner issuing Managers Check No. 001766 in the amount of P14,742,187 payable to the respondent.
Upon learning that some pilgrims paid directly to the respondent for their plane fares and accommodations, OMA Director Mangoda requested the petitioner to stop payment for further verification.
The petitioner complied and dishonored the managers check.
The respondent attempted to obtain payment through OMA and BPE officials, but to no avail, prompting the respondent to file the RTC complaint on August 14, 1990.
The complaint sought P5,969,428.88 plus 12% annual interest from the date of first demand, plus consequential, exemplary, attorneys’ fees, and costs.
The RTC rendered judgment only for P211,459.52, citing willingness to pay and denying further monetary awards based on the parties’ conduct.
After the Court of Appeals ordered payment of P14,742,187, the respondent sought execution, and the petitioner later sought to stop execution by attacking the RTC’s orders and the writ.
The petitioner grounded its post-judgment motions on alleged counsel negligence, alleged ambiguity in interest computation, the alleged excessiveness of the award relative to the complaint amount, and alleged lack of docket and filing fees for the increased amount.

MOA, Managers Check, and Dishonor

The MOA allocated tasks between the OMA/BPE and the respondent, with the petitioner serving as the depository through issuance of the managers check for airfare, accommodations, and other fees.
The record showed that dishonor followed OMA’s request after information that some pilgrims had paid directly to the respondent for their airfare and accommodations.
The dishonor became the factual basis for the respondent’s claim for the value of the dishonored managers check and associated monetary relie