Title
Palileo vs. Planters Development Bank
Case
G.R. No. 193650
Decision Date
Oct 8, 2014
A bank's late filing of a motion rendered a judgment final; SC ruled certiorari improper, reinstating RTC's decision and execution due to procedural lapses.
motion for reconsideration
new trial
denial

Case Summary (G.R. No. 223595)

Factual Background: The RTC Decision and the Default Setting

The RTC rendered its decision on June 15, 2006 in Civil Case No. 6474, awarding P1.52 million and P2.61 million in actual damages to plaintiffs Palileo and Dela Cruz, respectively, each accompanied by 12% compounded interest per annum from the filing of the case until full settlement. It also awarded moral damages of PHP 500,000 each, exemplary damages of PHP 500,000 each, and attorneys’ fees of PHP 500,000 each, plus costs.

The RTC’s factual backdrop showed that after summons and the filing of an answer by PDB, the case was set for pre-trial where PDB manifested intention to settle. Despite scheduled proceedings, PDB’s counsel failed to appear in the final pre-trial hearings. The RTC thus allowed plaintiffs to present evidence ex parte. The resulting judgment against PDB was therefore anchored on the trial court’s determination based on plaintiffs’ evidence in light of PDB’s non-appearance and procedural lapses during pre-trial.

PDB’s Omnibus Motion and the Trial Court’s August 30, 2006 Order

PDB received a copy of the RTC decision on July 17, 2006. On July 31, 2006, PDB filed an Omnibus Motion for Reconsideration and for New Trial by courier service through LBC. The RTC later found that the motion was actually received by the court on July 31, 2006 even though it was initially sent on July 28, 2006, and that it was followed by another filing by registered mail on August 2, 2006.

PDB’s motion was set for hearing on August 18, 2006, or sixteen (16) days after filing/setting in relation to the relevant dates, rather than within ten days. In an August 30, 2006 Order, the RTC denied the omnibus motion. It held that Rule 15, Section 5 required the notice of hearing to specify a hearing date not later than ten (10) days after the filing of the motion, and that noncompliance rendered the motion pro forma, a mere scrap of paper that produced no judicial cognizance. The RTC ruled that such procedural defect also meant the motion did not toll the period for appeal, rendering the June 15, 2006 decision final and executory. It nonetheless granted petitioners’ motion for execution pending appeal, treating it as a motion for execution of a final and executory judgment, and it issued a writ of execution.

The Writ of Execution and PDB’s Motions to Quash

PDB received the August 30, 2006 Order on September 14, 2006. A Writ of Execution was issued on August 31, 2006. PDB then filed an Urgent Motion to Quash Writ of Execution, asserting that the judgment was not yet final and executory, that its counsel had not received a copy of the writ, and that no entry of judgment had been made regarding the RTC decision. PDB later filed a Supplemental Motion to Quash Writ of Execution, claiming that the writ was addressed to its General Santos branch, which allegedly had no authority to accept it.

In an October 6, 2006 Order, the RTC denied the motion to quash. On October 9, 2006, the RTC issued a second Writ of Execution.

PDB’s Certiorari Before the CA and the CA’s Initial Dismissal

On October 11, 2006, PDB filed with the CA an original Petition for Certiorari, later amended, challenging: (a) the RTC’s August 30, 2006 Order denying the omnibus motion; (b) the RTC’s October 6, 2006 Order denying the motion to quash; and (c) the August 31, 2006 and October 9, 2006 writs.

On May 31, 2007, the CA dismissed PDB’s petition for lack of merit. It sustained the RTC’s application of Section 5, Rule 15, treating the ten-day hearing requirement as mandatory. It relied on Bacelonia v. Court of Appeals to characterize a noncompliant notice of hearing as pro forma, presenting no substantial question for judicial attention. The CA further noted PDB’s conduct as indicative of an effort to delay, including its failure to timely address earlier pre-trial issues that allowed plaintiffs to proceed ex parte. The CA also found PDB’s September 7, 2006 notice of appeal to be tardy.

The CA held that there was no irregularity in the writs of execution, and it rejected PDB’s claims concerning service and demand, reasoning that presentation of the writ to PDB constituted a demand and that PDB’s failure to attach the sheriffs return prevented review of its contention regarding service validity.

The CA’s July 28, 2009 Amended Decision and Its August 23, 2010 Resolution

PDB moved for reconsideration. On July 28, 2009, the CA issued the assailed Amended Decision, granting the petition for certiorari, setting aside the August 30, 2006 RTC Order, quashing the writ of execution, and ordering the RTC to hear and rule on the merits of PDB’s omnibus motion for reconsideration and new trial. In doing so, the CA reversed its earlier view. It ruled that PDB’s tacit position that the distance between PDB’s counsel and the trial court justified relaxation of the ten-day requirement warranted consideration. It read Rule 15, Section 5 together with Rule 15, Section 4, and it emphasized practical difficulties when filings are made by mail.

The CA also invoked the liberal construction mandate under Rule 1, Section 6 of the Rules of Court, and it treated PDB’s delay as an excusable lapse rather than a deliberate scheme to delay. It further criticized the RTC for blurring distinctions in related execution rules and for allegedly applying the ten-day notice requirement strictly only against PDB while accommodating plaintiffs in execution pending appeal. The CA concluded that the RTC’s denial amounted to grave abuse of discretion.

PDB’s motion for reconsideration of the amended ruling was later denied on August 23, 2010.

The Parties’ Contentions in This Court

Petitioners urged reinstatement of the CA’s original May 31, 2007 decision. They argued that the June 15, 2006 RTC decision became final and executory because PDB filed its omnibus motion one day too late. They pointed out that PDB received the decision on July 17, 2006 and thus had until August 1, 2006 to file a notice of appeal, motion for reconsideration, or a motion for new trial, but it filed on August 2, 2006. They further contended that PDB’s initial July 31 filing by courier was improper since there was allegedly no LBC service in Tupi, South Cotabato, and that the eventual registered-mail re-filing came too late.

Petitioners also maintained that PDB’s September 7, 2006 notice of appeal was tardy. They argued that PDB’s certiorari resort to the CA was improper because, under Rule 37, Section 9, the remedy against an order denying reconsideration or new trial was an appeal from the judgment or final order. They further contended that certiorari was not available because PDB did not file motions for reconsideration to address other assailed orders, and that certiorari served only as a strategy to revive a lost appeal and delay execution. Finally, they challenged the CA’s relaxation of procedural rules, emphasizing that PDB, as a banking institution, should not be excused for distance-related mistakes.

Respondent PDB countered that the CA did not err in declaring its omnibus motion non-pro forma and in holding that there were justifiable grounds for reconsideration and new trial. It maintained that it did not aim to delay and that the CA correctly relaxed Rule 15, Section 5 in the interest of due process and substantial justice.

Legal Basis and Reasoning of the Supreme Court

The Court held that the outcome turned on a fundamental procedural fact: PDB’s omnibus motion for reconsideration and new trial was filed one day too late. PDB received the RTC decision on July 17, 2006. Under the governing appeal period, it had fifteen (15) days or until August 1, 2006 to file the notice of appeal or a timely motion for new trial or reconsideration. Yet PDB filed its omnibus motion only on August 2, 2006. The Court treated PDB’s courier-service filing as not curing its default of the required period.

The Court further ruled that the mode of filing and service mattered because service and filing of pleadings by courier service was not recognized as a mode provided in the Rules. It also noted that PDB had sent a copy of its omnibus motion to an area not covered by LBC courier service at the time, thus reinforcing that the filing did not satisfy the procedural requirements. When PDB re-filed by registered mail, the decisive period had already expired. Consequently, PDB’s notice of appeal filed on September 7, 2006 was also tardy.

Given the untimeliness of both the omnibus motion and the notice of appeal, the Court ruled that PDB’s right to appeal was foreclosed and it could no longer question the RTC decision in any other manner. The Court relied on settled principles that a party who did not perfect an appeal was barred from assailing the correctness of a judgment not appealed from, and that finality attaches upon lapse of the reglementary period to appeal. When the judgment became final, it became conclusive not only as to the issues actually determined but also as to matters that could have been litigated and decided in connection with the subject matter of the action.

The Court also emphasized that once a judgment becomes final and executory, the court has the ministerial duty to issue a writ of execution, and execution becomes a matter of right when the judgment has become final and executory, or when the appeal period lapses without a perfected appeal. Applying those principles, the Court found no legal basis to relieve PDB from the consequences of its procedural errors.

The Court underscored multiple additional lapses. It stated that PDB did not attempt to rectify its failure to appear during pre-trial, which led to the ex parte presentation of evidence and a favorable default-type judgment for plaintiffs. It also noted that, even assuming timeliness, PDB violated the ten-day hearing-date requirement under Rule 15, Section 5. It further observed that PDB filed its notice of ap

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