Case Summary (G.R. No. 161265)
Key Dates
Lease contract: 30 July 1997; lease effective 1 October 1997.
Pre-termination notice by petitioner: 23 June 2000; lease vacated and surrendered: 31 July 2000; demanded refund due by 15 September 2000.
RTC decision in favor of petitioner: 8 November 2002.
Notice to file appellants’ brief received by respondents’ counsel: 16 July 2003 (reglementary deadline 1 September 2003).
CA Resolution dismissing appeal: 30 September 2003.
Respondents’ Motion for Reconsideration with attached brief: 27 October 2003.
CA Resolution granting respondents’ motion (allowing late brief): 27 November 2003; CA denial of petitioner’s motion for reconsideration: 5 May 2004.
Supreme Court decision: April 14, 2008 (use of the 1987 Constitution as governing constitutional framework).
Applicable Law and Authorities
Constitutional framework: 1987 Philippine Constitution (applicable to cases decided in 1990 or later).
Rules of Court provisions directly at issue: Section 7, Rule 44 (duty of appellant to file brief within 45 days) and Section 1(e), Rule 50 (grounds for dismissal of appeal for failure to file required copies of the brief).
Statutory provision invoked in the complaint: Section 31, Corporation Code (liability of directors for willful assent to unlawful acts, gross negligence or bad faith).
Controlling jurisprudential principles: Supreme Court decisions interpreting the discretion of the appellate court to dismiss appeals for failure to file appellants’ brief, including the rule that dismissal for late filing is discretionary (directory), not mandatory, and that exceptions permitting leniency require strong equitable grounds (e.g., gross counsel negligence depriving client of due process, risk of outright deprivation of liberty or property, or other compelling interests of justice).
Factual Background Relevant to the Dispute
Petitioner leased condominium units and parking from UFC under a lease requiring a rental payment and security deposit; contract contained a pre-termination clause entitling petitioner to refund of unused advance rentals and security deposit within 45 days following pre-termination. Petitioner gave timely written notice of pre-termination, vacated and surrendered the premises, and demanded refund of P1,093,600.00. UFC and its officers allegedly failed to refund the amount despite demands. Petitioner sued for specific performance with damages, seeking refund, interest, attorneys’ fees, moral and exemplary damages, and costs.
RTC Proceedings and Judgment
Respondents failed to appear at pre-trial and did not file a pre-trial brief, resulting in waiver of the right to adduce evidence; petitioner was allowed to present ex parte evidence. The RTC found for petitioner and rendered judgment ordering respondents, jointly and severally, to pay the claimed principal amount with statutory interest, attorneys’ fees, moral and exemplary damages, and costs.
Appeal and Court of Appeals Initial Action
Respondents appealed to the CA and were served with the notice to file appellants’ brief. They did not file the brief within the reglementary 45-day period and did not move for extension. Petitioner moved to dismiss the appeal. On 30 September 2003 the CA issued a resolution dismissing the appeal for failure to file the appellant’s brief pursuant to Section 1(e), Rule 50 of the Rules of Court.
Respondents’ Motion for Reconsideration at the CA and CA’s Grant
Respondents filed a motion for reconsideration explaining that their counsel used his residence as mailing address and that the domestic helper may have misplaced the notice; they attached the brief and requested its admission. On 27 November 2003 the CA granted the motion “in the interest of substantial justice,” reversed and set aside the 30 September 2003 resolution, admitted the late appellants’ brief, and allowed petitioner to file an appellee’s brief.
Petitioner’s CA Motion for Reconsideration and CA Denial
Petitioner sought reconsideration of the CA’s reinstatement of the appeal. The CA, in a 5 May 2004 resolution, denied petitioner’s motion, articulating the appellate court’s discretion to avoid harsh technicalities when substantial justice requires, encouraging resolution of appeals on merits when no prejudice to appellee is shown and when the circumstances warrant leniency.
Issue Presented to the Supreme Court
Whether the CA committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting respondents leave to file a late appellants’ brief (27 November 2003) and in denying petitioner’s motion for reconsideration (5 May 2004).
Governing Principles from Supreme Court Precedent
The Supreme Court summarized controlling principles: (1) the general rule is dismissal when no appellant’s brief is filed within the reglementary period; (2) dismissal for late filing is discretionary (directory), not mandatory; (3) the appellate court may waive the rule and allow late filing where circumstances warrant; (4) liberalization requires compelling equitable reasons—such as gross or reckless counsel negligence that deprives the client of due process, risk of outright deprivation of liberty or property, or other strong interests of justice; (5) delay must be reasonable, no material prejudice to appellee must be shown, and there should be no motion to dismiss pending.
Application of Law to the Present Facts
The Supreme Court examined respondents’ conduct and the record: respondents’ Answer admitted indebtedness except for a claim that payment was offered but refused; respondents repeatedly failed to comply with pre-trial requirements before the RTC and were declared to have waived the right to present evidence; respondents did not move to set aside that order; respondents did not file the appellant’s brief on time and only “attached” the brief to their motion for reconsideration 57 days after the reglementary deadline—an unreasonably long delay. The Court found respondents’ excuse (misplaced notice by domestic helper due to counsel’s use of residence as mailing address) insufficient. The pattern of laxity and indolence, a
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Court and Case Reference
- Decision of the Supreme Court, Third Division, G.R. No. 164150, dated April 14, 2008 (574 Phil. 380).
- Decision text headed "D E C I S I O N CHICO-NAZARIO, J." indicating Justice Carla P. Chico-Nazario as the author of the opinion.
- Final line of the decision records: "SO ORDERED. Ynares-Santiago, (Chairperson), Austria-Martinez, Nachura, and Reyes, JJ., concur."
- Petition filed by the Government of the Kingdom of Belgium, represented by the Royal Embassy of Belgium (through its Ambassador to the Philippines, His Excellency R. Schellinck) against respondents including the Court of Appeals and private parties (Unified Field Corporation and its officers/directors).
Relief Sought in the Petition
- A petition for certiorari under Rule 65 of the Rules of Court.
- The petition assails:
- The Court of Appeals Resolution dated 27 November 2003 in CA-G.R. CV No. 77701 which granted Unified Field Corporation’s Motion for Reconsideration and allowed the filing/admission of its appellant’s brief; and
- The Court of Appeals Resolution dated 5 May 2004 which denied petitioner’s motion for reconsideration of the 27 November 2003 resolution.
Factual Background (Lease and Pre-termination)
- On 30 July 1997 petitioner and respondent Unified Field Corporation (UFC), represented by its President Marilyn G. Ong, executed a Contract of Lease.
- Under the contract petitioner leased Units "B" and "D" (gross area ≈ 377 sq. m.) and six parking lots at Chatham House Condominium, Salcedo Village, Makati City, for a maximum term of four (4) years beginning 1 October 1997.
- Rental and security payment terms included:
- P5,430,240.00 as rentals for the first two years (1 Oct 1997–30 Sep 1999), payable in full upon official turnover of the leased premises; and
- P678,780.00 as security deposit — total paid P6,109,020.00.
- The lease contained a pretermination clause (Paragraph 22) allowing the lessee to pre-terminate after certain periods and prescribing refund mechanics, including refund of unused advance rentals and security deposit within forty-five (45) days following receipt of full pre-termination payment.
Pre-termination Notice, Vacatur and Alleged Failure to Refund
- On or about 23 June 2000 petitioner, through counsel, served UFC (through President Marilyn G. Ong) with a written notice dated 23 June 2000 informing UFC of pre-termination effective 31 July 2000.
- Petitioner requested return/delivery by 15 September 2000 (within 45 days) of an aggregate P1,093,600.00 comprising:
- Unused two months advance rentals for August and September 2000 in the sum of P414,820.00; and
- Security deposit of P678,780.00.
- Petitioner vacated and surrendered the leased premises on 31 July 2000, free of outstanding utilities or damages.
- Respondents allegedly ignored the 23 June 2000 demands and failed to return the P1,093,600.00. Petitioner alleged that UFC committed fraud in performance of paragraph 22 by not returning the funds despite repeated demands.
Claims Against Corporate Entity and Individual Directors
- Petitioner alleged that the individual respondents, as directors of UFC, willfully and knowingly assented to patently unlawful acts or were guilty of gross negligence or bad faith in directing corporate affairs.
- Reliance on Section 31 of the Corporation Code: directors who vote for or assent to patently unlawful acts or are guilty of gross negligence or bad faith shall be liable jointly and severally for resulting damages.
- Prayer to the RTC sought, among others:
- Principal P1,093,600.00 plus 12% per annum interest from 15 September 2000 until full payment and 6% per annum on interest from filing of complaint until principal is paid;
- P400,000.00 as attorney’s fees and litigation expenses (actual damages);
- P100,000.00 moral damages; P100,000.00 exemplary damages; and costs of suit.
Trial Court Proceedings and Judgment (RTC Makati, Branch 150; Civil Case No. 01-976)
- Respondents filed an Answer with Compulsory Counterclaim on 2 August 2001.
- Pre-trial was set repeatedly; respondents failed to appear and failed to file the required pre-trial brief.
- The trial court declared respondents to have waived their right to adduce evidence at pre-trial and allowed petitioner to present evidence ex parte (19 June 2002 and 19 August 2002).
- RTC rendered decision on 8 November 2002 in favor of petitioner. Dispositive portion ordered:
- Joint and several payment of Php1,093,600.00 (two months rentals and security deposit) plus 12% p.a. interest from 15 Sep 2000 until principal is fully paid and 6% p.a. on interest from filing until principal is fully paid;
- Php400,000.00 as attorney’s fees and litigation expenses;
- Php100,000.00 as moral damages;
- Php100,000.00 as exemplary damages; and costs of suit.
Appeal and Court of Appeals Proceedings
- Respondents appealed to the Court of Appeals and received a Notice to File Brief.
- Respondents failed to file their appellant’s brief within the reglementary 45-day period (notice received 16 July 2003; deadline 1 September 2003).
- Petitioner filed a Motion to Dismiss Appeal on 17 September 2003 citing respondents’ failure to comply; no opposition or motion for extension was filed by respondents.
- Court of Appeals Resolution dated 30 September 2003 dismissed the appeal as abandoned pursuant to Section 1(e), Rule 50 of the Rules on Civil Procedure (failure to file brief).
Motion for Reconsideration to the Court of Appeals and Its Resolutions
- Respondents filed a Motion for Reconsideration on 27 October 2003, attaching their appellant’s brief and explaining the failure to file was due to inadvertence — counsel used his residence as mailing address and a domestic helper might have misplaced the notice.
- Court of App