Case Summary (G.R. No. L-28838)
Background and Contractual Relations
Petitioner Nestor Rodriguez was awarded two DPWH contracts involving road construction projects in the provinces of Aklan and Antique. Respondent Quirico Pe agreed in 1998 to supply cement for these projects. To facilitate payments under DPWH’s pre-payment program for the Kalibo project, petitioner Nestor Rodriguez issued a blank LBP check (No. 6563066), co-signed by his wife and business partner, to respondent as collateral for 15,698 bags of Portland cement valued at PHP 1,507,008.00, documented by an official receipt issued by respondent’s business. However, respondent reportedly unilaterally filled in the blank check with PHP 2,062,000.00 dated June 30, 1999.
Procedural History and Claims
Petitioners filed an amended complaint with the Regional Trial Court (RTC) of Iloilo City for declaration of payment, cancellation of documents, and damages. They claimed the blank check was collateral only to guarantee payment of cement valued at PHP 1,507,008.00 and that after settling PHP 2,306,500.00 for cement supplies, they were discharged of further liability. Respondent counterclaimed for the unpaid balance of PHP 2,062,000.00 plus interest, alleging that petitioners stopped bank-to-bank payments prompting him to fill up the blank check accordingly.
RTC Findings and Decision
The RTC in its June 28, 2002 decision ruled that respondent’s filling in of the blank check amount was unauthorized and done untimely, based on Section 14 of the Negotiable Instruments Law, which requires strict adherence to the authority given and a reasonable time for filling blanks. The RTC found petitioners had fully paid for the relevant cement supplies and declared the blank check null and void. The RTC awarded actual damages, moral damages, attorney’s fees, and costs to petitioners, while dismissing respondent's counterclaim.
Appeal and Controversy Over Payment of Appeal Fees
Respondent filed a timely notice of appeal on July 30, 2002. Although the RTC initially gave due course to respondent's appeal and directed records transmission to the Court of Appeals (CA), petitioners moved to dismiss the appeal for non-payment of docket and legal fees as required under Section 4, Rule 41 of the Rules of Court. The RTC subsequently dismissed the appeal for non-payment and ordered execution of its decision. Respondent secured a writ of preliminary injunction from the CA enjoining execution, which led to the CA ultimately reversing the RTC’s order and directing that appellate docket fees be assessed and paid belatedly to perfect the appeal.
Issues on Appeal Before the Supreme Court
The sole issue raised by petitioners was whether the CA erred in allowing respondent to belatedly pay the docket and other lawful fees after failing to pay them upon filing the notice of appeal, thereby reversing the RTC decision and allowing the appeal to proceed.
Supreme Court’s Analysis on Appeal Perfection and Jurisdiction
The Supreme Court emphasized that, under the 1987 Philippine Constitution and pertinent procedural rules, the perfection of an appeal from RTC to CA requires both: (1) the timely filing of a notice of appeal within 15 days from notice of judgment, and (2) the payment of the full amount of appellate docket and other lawful fees within the same 15-day period, as mandated by Section 4, Rule 41 of the Rules of Court.
Failure to comply with these requirements is not a mere procedural technicality but jurisdictional, depriving the appellate court of jurisdiction and rendering the appeal dismissible. The Court rejected respondent’s reliance on Yambao v. Court of Appeals, clarifying that in the present case there was no payment or partial payment of fees on or before appeal filing, only a failure to pay at all.
Effect of Non-Payment of Fees and Jurisdictional Consequences
The Court explained that although respondent filed a notice of appeal timely, failure to pay the docket and other legal fees foreclosed perfection of the appeal. The RTC retained jurisdiction and properly dismissed the appeal due to non-payment. The CA erred in granting due course and in ordering belated payment of fees, as such practice would undermine the strict rules governing appeal perfection and finality of decisions.
The Court further clarified that non-payment of fees due to mistaken assumptions regarding assessment by the court clerk constitutes inexcusable negligence of counsel, which is imputed to the party represented. Ignorance or neglect of procedural rules cannot excuse failure to comply.
Jurisdictional Effect of Appeal Perfection Under Section 9, Rule 41
The Court clarified the jurisdictional principle that the RTC only loses jurisdiction upon the perfection of a timely appeal and expiration of time to appeal by other parties. Prior to perfection, the RTC may issue orders necessary to protect the rights of prevailing parties, including writs of execution.
Contrary to the CA’s reasoning, issuance of an order giving due course to an appeal notice without payment of fees did not divest the trial court of jurisdiction. The RTC properly dismissed the appeal prior to record transmission for non-payment. Consequently, the RTC decision became final and executory.
Proper Remedy to Challenge CA’s Decision
Respondent argued the petitioners' challenge should be under Rule 65 writ of certiorari for interlocutory orders rather than petition for review on certiorari under Rule 45. The Court rejected this, affirming that appeals or petitions challenging CA final orders or resolutions are properly filed under Rule 45 irrespective of the interlocutory nature of some aspects. Therefore, petitioners’ Rule 45 petition was the appropriate remedy.
Summary of the Court’s Ruling and
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Case Syllabus (G.R. No. L-28838)
Parties and Nature of the Case
- Petitioners: Augustus Gonzales and Spouses Engr. Nestor Victor and Dr. Ma. Lourdes Rodriguez, involved as suppliers and contractors engaged with the Department of Public Works and Highways (DPWH).
- Respondent: Quirico Pe, engaged in the business of construction materials and supplier of cement to petitioners.
- The case involves a contractual dispute over delivered cement supplies, payment obligations, and the validity and enforcement of a blank check later filled out by respondent.
Facts and Background
- DPWH awarded two construction contracts to petitioner Nestor Rodriguez involving roads in Aklan and Antique provinces.
- Respondent agreed to supply cement for petitioner spouses’ projects in 1998.
- Petitioner Nestor Rodriguez availed of DPWH’s pre-payment program allowing advance payments based on official receipts for delivered cement.
- Petitioner Nestor Rodriguez issued a blank Land Bank of the Philippines (LBP) check signed by himself, his wife Ma. Lourdes Rodriguez, and business partner Augustus Gonzales, handed over to respondent to guarantee payment for 15,698 bags of Portland cement amounting to P1,507,008.00.
- Respondent subsequently filled the blank check with P2,062,000.00 and dated it June 30, 1999, which exceeded the value of cement supplied guaranteed by the check.
- Petitioners filed an Amended Complaint in December 1999 for declaration of payment, cancellation of the check, and damages asserting that they had fully paid respondent and sought to invalidate the improperly filled check.
- Respondent claimed he delivered 40,360 bags and the petitioners owed him P2,062,000.00, filing a counterclaim for recovery of this balance with interest.
Issues Presented before Trial Court
- Whether petitioners’ liability for the cement subject of the blank check was fully paid.
- Whether the blank LBP check should be canceled or returned.
- Whether full payment for cement amounting to P2,167,340.00 (23,360 bags) was made.
- Whether petitioners are entitled to damages and attorney’s fees.
- Whether the case should be dismissed and the counterclaim allowed to proceed.
Trial Court Ruling
- Applying Section 14 of the Negotiable Instruments Law, the trial court held that respondent’s filling up of the blank check was unauthorized and done beyond a reasonable time.
- Found petitioners had fully paid the amount due for the 23,360 bags of cement.
- Declared the Land Bank Check No. 6563066 in the amount of P2,062,000.00 null and void.
- Awarded actual damages, moral damages, attorney’s fees, appearance fee, and litigation expenses to petitioners.
- Dismissed respondent’s counterclaim.
- Judgment favored petitioners and against respondent.
Post-Trial Appeals and Proceedings
- Respondent filed a Notice of Appeal within the reglementary period but did not pay docket and other lawful fees required by Section 4, Rule 41 of the Rules of Court.
- The trial court initial