G.R. No. 163785 - KKK Foundation, Inc. vs. Calderon-Bargas

Case Summary (G.R. No. 163785)

Factual Background

On March 1, 2002, petitioner filed the complaint alleging, among others, that (i) the auction sale was attended by fraud and/or bad faith because there was allegedly no public bidding; (ii) the sheriff allegedly failed to post the required Notice of Sheriffs Sale; (iii) the extrajudicial foreclosure petition was allegedly fatally defective for purportedly seeking to foreclose properties of two different entities; (iv) the properties were allegedly sold to Angeles for an inadequate bid amount of P4,181,450; and (v) eight parcels covered by individual titles were allegedly sold en masse. On March 7, 2002, Judge Calderon-Bargas issued a temporary restraining order restraining Angeles from consolidating ownership over the foreclosed properties. On the same date, petitioner and Angeles executed a Compromise Agreement, whereby petitioner undertook to pay Angeles the bid price of the eight parcels of land within twenty (20) days. The parties then moved for judicial approval of the compromise.

On April 1, 2002, petitioner filed an urgent ex parte motion to recall the compromise, asserting that the other property owner and other trustees of petitioner were not consulted before signing. Angeles opposed the motion. On May 2, 2002, Judge Calderon-Bargas issued an order declaring both the urgent ex parte motion to recall and the motion to approve compromise agreement to be mere scraps of paper for failure to comply with Sections 4 and 5, Rule 15 of the Civil Procedure, particularly because the motions had no hearing date.

Nevertheless, in a Decision dated June 28, 2002, the trial court approved the Compromise Agreement. The approved terms required petitioner to pay P5,500,000.00 representing the bid price for all eight titles within twenty (20) days. Upon payment, Angeles was required to execute a Certificate of Deed of Redemption and a Deed of Cancellation of Mortgage for all titles and surrender the eight titles to petitioner, together with the return of checks previously issued. The trial court found the compromise not contrary to law, morals, good customs, and public policy.

Trial Court Proceedings Relating to Execution

After approval of the compromise, Angeles moved for issuance of a writ of execution. On September 9, 2002, the trial court required petitioner to comment within ten (10) days. On October 3, 2002, the trial court directed the Clerk of Court to issue the writ of execution. On the same date, the trial court received petitioner’s Motion for Extension of Time to File Comment with Entry of Appearance, but it was denied on October 10, 2002. Petitioner then moved for reconsideration of the October 3, 2002 order.

Petitioner sought relief from the Court of Appeals through a petition for certiorari, alleging that Judge Calderon-Bargas committed grave abuse of discretion amounting to lack or excess of jurisdiction when she: (i) issued the October 3, 2002 and October 10, 2002 orders before petitioner could file its comment; (ii) granted the motion for issuance of the writ of execution despite alleged lack of the requisite notice of hearing; and (iii) issued a writ of execution that changed the tenor of the June 28, 2002 decision.

Ruling of the Court of Appeals

The Court of Appeals dismissed the petition. It held that petitioner was not deprived of due process when the trial court issued the October 3, 2002 and October 10, 2002 orders because petitioner supposedly had sufficient time to file a comment. The appellate court did not rule on the second and third issues because petitioner’s motion for reconsideration of the October 3, 2002 order was still pending at the time the petition was filed. The Court of Appeals also later indicated that it did not resolve the issues even after the trial court denied petitioner’s motion for reconsideration on December 12, 2003, reasoning that at the time of filing, petitioner had no cause of action.

The Parties’ Contentions in the Rule 45 Petition

Before the Supreme Court, petitioner assigned error to the Court of Appeals for purportedly failing to hold that it was denied procedural due process and that Judge Calderon-Bargas committed grave abuse of discretion in granting Angeles’ motion for writ of execution and in issuing the writ in a manner that varied the tenor of the judgment. Petitioner contended that it was denied due process because the trial court granted Angeles’ motion on October 3, 2002 even though its motion for extension and entry of appearance was received on that same date, and because Sheriff Bisnar served notice to settle or pay the compromise judgment amount while petitioner’s motion for reconsideration remained pending. Petitioner further argued that Angeles’ motion lacked the requisite notice of hearing, and that the writ of execution varied the terms of the June 28, 2002 decision by allowing consolidation in favor of Angeles.

Angeles countered that petitioner was not denied due process since it had been given ten (10) days to file a comment on the motion for issuance of the writ, but petitioner did not file any comment within the reglementary period, even though it later filed a motion for extension after the period had lapsed. Angeles maintained that her motion for issuance of the writ contained the requisite notice of hearing and that the writ did not vary the tenor of the June 28, 2002 decision.

Supreme Court Analysis on Due Process: Timeliness of Comment

On the first issue, the Court noted that on September 9, 2002, the trial court had given petitioner ten (10) days within which to file its comment on Angeles’ motion for issuance of writ of execution. Petitioner asserted that it received the September 9 order only on September 21, 2002, while Angeles maintained that petitioner received it on September 12, 2002. The Court found Angeles’ version more credible because the trial court itself stated in its October 10, 2002 order that the September 9, 2002 order had been personally served on petitioner on September 12, 2002. As a result, petitioner’s deadline fell on September 22, 2002. Petitioner’s motion for extension and comment was therefore not seasonably filed. The Court held that the procedural lapse bound petitioner.

Supreme Court Analysis on the Rule 15 Notice Requirement

On the second issue, the Court reiterated that motions that do not comply with Sections 4 and 5, Rule 15 are treated as worthless pieces of paper that the clerk has no right to receive and the trial court has no authority to act upon. It emphasized that service of a copy of a motion containing a notice specifying the time and place of hearing is mandatory, and failure to comply renders the motion fatally defective. It also acknowledged that strict application may yield to recognized exceptions, including where rigid application results in manifest miscarriage of justice; where substantial justice is served; where resolution is directed to the court’s discretion; and where the injustice to the adverse party is not commensurate with the party’s thoughtlessness in not complying.

The Court further explained that a notice of hearing is an integral part of procedural due process because it affords an adverse party a chance to be heard before a motion is resolved. While the Court recognized that Angeles’ motion contained a notice of hearing, it did not particularly state the date and time of the hearing. Still, the Court concluded that petitioner was not denied procedural due process because the trial court issued an order on September 9, 2002 giving petitioner ten (10) days to file its comment, and the trial court resolved the motion only after the reglementary period lapsed. The Court reasoned that the purpose of notice—allowing the adverse party to study and comment—had been achieved. It held that the notice requirement is not a ritual to be followed blindly and that procedural rules are liberally construed to promote just, speedy, and inexpensive determination.

Supreme Court Analysis on Execution vs. the Judgment’s Tenor

On the last issue, the Court examined the relation between the June 28, 2002 decision and the writ of execution issued thereafter. The Compromise Agreement, as approved by the t

Case Syllabus (G.R. No. 163785)

The petitioner KKK Foundation, Inc. filed a petition for review under Rule 45 of the Rules of Court to reverse and set aside the Court of Appeals Decision dated November 28, 2003 and Resolution dated May 26, 2004 in CA-G.R. SP No. 73965.
The respondents were Hon. Adelina Calderon-Bargas, in her capacity as Presiding Judge of the Regional Trial Court, Branch 78 of Morong, Rizal, Sheriff IV Sales T. Bisnar, the Register of Deeds for Morong, Rizal, and Imelda A. Angeles.
The petition questioned the propriety of trial court orders and the validity of a writ of execution issued after approval of a compromise agreement.

Parties and Procedural Posture

The petitioner KKK Foundation, Inc. initiated the underlying civil case for annulment of extra-judicial foreclosure of real estate mortgage, nullification of sheriff’s auction sale, and damages, with a prayer for a temporary restraining order and/or writ of preliminary injunction.
The trial court issued a temporary restraining order that prevented Angeles from consolidating ownership pending the proceedings.
The parties executed a Compromise Agreement, and the trial court later approved it in a Decision dated June 28, 2002.
Angeles then moved for issuance of a writ of execution, which the trial court granted via an order dated October 3, 2002, and further acted upon through subsequent orders.
The petitioner sought certiorari before the Court of Appeals, alleging grave abuse of discretion amounting to lack or excess of jurisdiction, but the Court of Appeals dismissed the petition.
The Court of Appeals ruled that petitioner was not deprived of due process because it had time to file its comment, and it declined to resolve other issues due to a pending motion for reconsideration at the time the certiorari petition was filed.
The petitioner then elevated the matter to the Supreme Court through the present Rule 45 petition, assigning errors focused on procedural due process, notice of hearing, and conformity of the writ of execution to the judgment.

Key Factual Allegations

The petitioner alleged that the sheriff’s auction was attended by fraud and/or bad faith because there was no public bidding.
The petitioner alleged that the sheriff failed to post the requisite Notice of Sheriff’s Sale.
The petitioner alleged that the petition for extrajudicial foreclosure was fatally defective because it sought to foreclose properties belonging to two different entities.
The petitioner alleged that the foreclosed properties were awarded to Angeles for an inadequate bid of P4,181,450.
The petitioner alleged that the auction sale involved eight parcels of land covered by individual titles but were sold en masse.
After the trial court issued a temporary restraining order, the petitioner and Angeles executed a Compromise Agreement in which petitioner agreed to pay Angeles within twenty (20) days the bid price for all eight parcels.
The petitioner later filed an urgent ex parte motion to recall the compromise agreement, claiming that the other property owner and other trustees of petitioner were not consulted before signing.
Angeles opposed the recall motion, and the trial court treated both the recall motion and the motion to approve the compromise agreement as “mere scrap[s] of paper” due to noncompliance with Sections 4 and 5, Rule 15 of the Civil Procedure rules.
Despite that treatment of the earlier motion proceedings, the trial court approved the Compromise Agreement in its Decision dated June 28, 2002, and after approval Angeles moved for execution of the compromise terms.

Trial Court Orders and Motions

On September 9, 2002, the trial court required the petitioner to comment on Angeles’s motion for issuance of a writ of execution within ten (10) days.
On October 3, 2002, the trial court directed the Clerk of Court to issue the writ of execution.
On the same date, the trial court received the petitioner’s Motion for Extension of Time to File Comment with Entry of Appearance, but it was denied on October 10, 2002.
The petitioner then moved for reconsideration of the October 3, 2002 order.
The trial court issued the writ of execution on October 11, 2002, and that writ later became the subject of the petitioner’s challenge as varying the tenor of the June 28, 2002 decision.
The petitioner’s certiorari theory before the Court of Appeals rested on the claim that the trial court issued the October 3 and October 10 orders before the petitioner could file its comment, granted execution without proper notice of hearing, and altered the tenor of the judgment through the writ of execution.

Issues Before the Supreme Court

The Supreme Court addressed whether the trial court seriously erred in issuing the October 3, 2002 and October 10, 2002 orders without awaiting the petitioner’s comment.
The Supreme Court addressed whether the trial court committed grave abuse of discretion in granting Angeles’s motion for writ of execution despit