G.R. No. 159118 - Cunada vs. Drilon

Case Summary (G.R. No. 159118)

Genesis of the Dispute and Trial Proceedings

Planters Products, Inc. initiated an action in the Regional Trial Court, Branch 41, Bacolod City for the recovery of a deficiency on the proceeds of an extrajudicial foreclosure of the mortgage executed by petitioners in favor of the private respondent. Petitioners were represented in the case by petitioner Victor Cunada, including representation of his wife. The pre-trial was terminated on March 29, 1982, and the plaintiff rested its case on February 10, 1986. During the defense, petitioner Victor Cunada testified on direct examination on October 29, 1991 and November 4, 1991, but his direct testimony was not completed, and no further hearing followed until later scheduling. The RTC set the case for resumption of hearing multiple times on February 12, 1992, April 29, 1992, June 8, 1992, July 23, 1992, September 17, 1992, and December 7, 1992.

Notices of Hearing and Non-Completion of Testimony

When the RTC scheduled the resumption for February 12, 1992, petitioners’ secretary refused to receive the notice of hearing. The refusal was accompanied by the explanation that petitioners were out of the country and their return was uncertain. The RTC attempted to serve subsequent notices of hearing as well, but service was again not effected because petitioners had not yet returned from the United States. On December 7, 1992, the RTC issued an Order to strike out the testimony of petitioner Victor Cunada from the record on the ground that he never completed his testimony. The RTC treated the spouses as having waived the further presentation of evidence and deemed the case submitted for decision.

RTC Decision and Post-Judgment Motion

By that time, multiple judges had presided over the case during its protracted pendency. Ultimately, on October 15, 2001, the RTC rendered judgment in favor of Planters Products, Inc. Petitioners then moved for new trial or reconsideration, but the RTC denied the motion in an Order dated April 23, 2003. The RTC rendered its decision based on the evidence presented by the plaintiff, considering petitioner Victor Cunada’s incomplete testimony to have been properly stricken off, and thus not usable in the adjudication.

Petition for Certiorari and Grounds for Dismissal

After the RTC’s denial of their motion for new trial or reconsideration, petitioners filed a Petition for Certiorari, which the Court dismissed in a Resolution dated September 17, 2003. The Court dismissed the petition for failure to submit a verified statement of the material dates. The Court treated the petition as an improper use of certiorari as it was instead a wrong remedy used in place of the remedy of appeal. The Court also cited petitioners’ disregard of judicial hierarchy in filing before this Court. The Court grounded the material dates requirement in Section 4, Rule 65 in relation to the second paragraph of Section 3, Rule 46, emphasizing that the last paragraph of Section 3, Rule 46 allows dismissal for non-compliance with foregoing requirements. The Court further invoked SC Circular No. 1-88, specifically its directive that a petition must include, in all cases, a verified statement of (a) when notice of the judgment, order, or resolution subject of the petition was received, (b) when any motion for reconsideration was filed, and (c) when notice of denial of such motion was received; otherwise, dismissal may ensue.

Record-Correction Request and Timeliness of Motion for Reconsideration

In a verified Request for Correction dated April 2, 2004, petitioners asked the Court’s offices to check the records to effect a correction and prevent a manifest failure or serious miscarriage of justice. Petitioners asserted that on November 11, 2003, one day before the expiration of the prescribed fifteen-day period, they filed a Motion for Reconsideration with an attached Amended Petition of the Court’s Resolution dated September 17, 2003, which had dismissed their certiorari petition. Petitioners also noted that the Court had, without action, their Motion to Admit Supplemental Pleading dated July 16, 2003. The record showed that although the Motion for Reconsideration had been posted at the Bacolod City Post Office on November 11, 2003, the Court received it only on March 15, 2004. The Court nevertheless found that petitioners had seasonably filed the Motion for Reconsideration. Consequently, the Court held that the Resolution of September 17, 2003 dismissing the certiorari petition never attained finality.

Recall of Entry of Judgment, Denial of Reconsideration, and Notation Without Action

Because the dismissal Resolution had not attained finality, the Court recalled the Entry of Judgment made on November 12, 2003. The Court then addressed the Motion for Reconsideration itself. It denied the motion, stating that petitioners presented neither cogent reason nor substantial argument to justify reconsideration. The Court explained that while petitioners had sought to cure the defective certiorari petition by filing an Amended Petition containing the pertinent material dates, subsequent compliance did not warrant reconsideration. Thus, the Amended Petition could not be acted upon and was merely noted without action.

Issues Considered by the Court: Remedy, Hierarchy, and Alleged Due Process Violations

The Court also reiterated why certiorari was the wrong procedural vehicle. It cited Section 1 of Rule 65, which provides that certiorari lies only when there is no appeal or when there is no plain, speedy, and adequate remedy in the ordinary course of law. The Court held that certiorari was unavailable where the proper remedy was appeal, because the assailed RTC decision constituted a final determination of the rights of the parties. The Court also reaffirmed the doctrine of judicial hierarchy in petitions for certiorari: petitions challenging first-level courts should be filed with the Regional Trial Court; petitions against later courts should be filed with the Court of Appeals; direct resort to the Supreme Court was allowed only for special and important reasons clearly and specifically set out in the petition. The Court found no exceptional and compelling circumstances in petitioners’ petition that would justify disregarding that rule.

Even assuming arguendo that certiorari might be the proper remedy, the Court examined the substantive claims raised. Petitioners alleged denial of due process because the RTC allegedly issued its order striking out their evidence and rendered the decision despite alleged lack of valid service of notices of hearing and other processes. The Court rejected the contention. It reasoned that trial commenced with petitioners’ full participation, and petitioners were given opportunity to present evidence but failed to complete it. It also stressed the case’s lengthy pendency of ten (10) years under the same trial court, during which time several judges had presided over the case. The Court viewed petitioners’ due process invocation as a maneuver to postpone execution of the adverse judgment in favor of the private respondent.

Fair Play and Due Process in the Striking Out of Incomplete Testimony

The Court tied its due process assessment to the conduct of petitioners during trial. It recognized that petitioner Victor Cunada could not complete his direct testimony because he remained overseas and the notices could not be properly served. Nevertheless, the Court held that petitioner had the duty to complete his testimony and to make himself available for cross-examination in accordance with fair play and due process. Since the testimony remained incomplete, it could not be subjected to cross-examination, and thus it became incompetent and inadmissible in evidence and was properly stricken out.

Deficiency Judgment After Extrajudicial Foreclosure

Petitioners further argued that the law did not allow deficiency judgment in an extrajudicial foreclosure of mortgage. The Court rejected this argument. It held that it was alre

Case Syllabus (G.R. No. 159118)

Parties and Procedural Posture

Victor B. Cunada and Hedy V. Cunada appeared as petitioners in a proceeding seeking certiorari relief.
Hon. Ray Alan T. Drilon as Presiding Judge of the RTC, Br. 41, Bacolod City was named as a respondent judge.
Planters Products, Inc. appeared as respondent and was the private litigant before the trial court.
The Court resolved a verified Request for Correction dated April 2, 2004 filed by the petitioners.
The request sought correction of the records to avoid a manifest failure or serious miscarriage of justice.
The Court treated the matter as involving the propriety and timing of a Resolution dismissing the earlier Petition for Certiorari.
The Court ultimately recalled the Entry of Judgment of November 12, 2003 due to the belated receipt of a seasonably filed Motion for Reconsideration.
The Court denied with finality the petitioners Motion for Reconsideration, and noted without action the petitioners Amended Petition.

Key Factual Background

The petitioners averred that they filed a Motion for Reconsideration on November 11, 2003, one day before the expiration of the prescribed fifteen-day period, and attached an Amended Petition to it.
The Motion for Reconsideration challenged the Court’s Resolution dated September 17, 2003 that dismissed the petitioners earlier Petition for Certiorari.
The petitioners also referenced that the Court noted without action their Motion to Admit Supplemental Pleading dated July 16, 2003.
The record showed the Motion for Reconsideration was posted with the Bacolod City Post Office on November 11, 2003 but was received by the Court only on March 15, 2004.
The petitioners’ theory of prejudice rested on the asserted prompt filing, with late court receipt, allegedly preventing the dismissal resolution from attaining finality.
The underlying trial controversy concerned a long-pending case initiated in February 11, 1981 involving the recovery of a deficiency after an extrajudicial foreclosure of mortgage.
The case reached trial and judgment only after extensive proceedings spanning years, with the trial court presiding through multiple judges.
The trial court eventually struck out the petitioners’ incomplete direct testimony on December 7, 1992 for failure to complete it, treated the case as submitted for decision, and later rendered judgment in favor of Planters Products on October 15, 2001.

Timing and Record Correction

The Court held that the petitioners Motion for Reconsideration was seasonably filed despite the Court’s belated receipt on March 15, 2004.
The Court concluded that the Resolution dated September 17, 2003 dismissing the Petition for Certiorari therefore never attained finality.
The Court ruled that the Entry of Judgment made on November 12, 2003 should be recalled because the dismissal had not become final in view of the pending reconsideration.
The Court still denied reconsideration on the ground that there were no cogent reasons or substantial arguments to warrant it.

Jurisprudential Errors Alleged

The petitioners sought correction to prevent a “manifest failure” or “serious miscarriage of justice” arising from the premature finality implied by the entry of judgment.
The earlier Petition for Certiorari had been dismissed because it allegedly suffered from procedural defects, including failure to comply with required material dates.
The petitioners attempted to cure the procedural defect by filing an Amended Petition containing the pertinent dates.
The Court treated this subsequent compliance as insufficient to reopen the dismissed matter through reconsideration.

Statutory and Rule Framework

The Court relied on Section 4, Rule 65 in relation to the second paragraph of Section 3, Rule 46 of the Rules of Court.
The Court emphasized that a petition must include the material dates, including receipt of notice of the judgment, and receipt of notice of denial of any motion for reconsideration or new trial.
The Court applied the rule that failure to comply with these requirements is sufficient ground for dismissal.
The Court cited SC Circular No. 1-88 and, in particular, No. 4, requiring that petitions contain a verified statement of the relevant material dates or face dismissal.
The Court also invoked Rule 65, Section 1, stating that certiorari lies only when there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.
The Court reiterated that certiorari is not available where the proper remedy is an appeal in due course.
The Court invoked the doctrine of judicial hierarchy, distinguishing petitions against first-level courts from those against courts of appeal-level or latter-level courts.

Grounds for Dismissal of Certiorari

The Court held that the petitioners used certiorari as a wrong remedy because an appeal was the proper course.
The Court stated that the assailed trial court decision constituted a final determination of the rights of the parties.
The Court concluded that there was no justification to depart from the principle that certiorari is unavailable when an appeal lies.
The Court further held that the petitioners violated judicial hierarchy by filing the petition directly before the Court without special and important reasons.
The Court noted that concurrence of jurisdiction does not grant litigants “free reign” in forum selection for certiorari petitions.
The Court stated that direct resort to the Supreme Court is allowed only upon special and important reasons clearly and specifically set out in the petition.
The Court found an absence of exceptional and compelling circumstances in the petition to justify bypassing the hierarchy.
As an additional matter, the Court held that even i