G.R. No. 200469 - Philippine Savings Bank vs. Papa

Case Summary (G.R. No. 200469)

Factual Background

PSB sued Papa in the MeTC for collection of sum of money on a flexi-loan allegedly in the face amount of P207,600.00 payable in twenty-four monthly installments of P8,650.00 with interest at 38.40% per annum. Papa allegedly executed a promissory note dated 26 July 2005 providing for additional charges in case of default. PSB claimed default and that as of 27 March 2006 Papa owed P173,000.00. Papa answered and alleged that staggered payments had extinguished her liability and that interest and damages were not due.

Trial Court Proceedings and Evidence

At trial PSB offered a photocopy of the promissory note, which the MeTC admitted over Papa’s objection. Papa declined to present evidence and informed the court she would file a memorandum. After submissions the MeTC resolved the case on the merits.

MeTC Decision

The MeTC rendered judgment in favor of PSB on 23 December 2008. The court found that PSB established its cause of action by preponderance of evidence and observed that Papa failed to prove the alleged payments. The MeTC moderated the claimed charges and awarded P173,000.00 plus interest at 12% per annum from 9 February 2006, attorney’s fees of P20,000.00, and costs.

RTC Proceedings and Ruling

Papa appealed to the RTC. The RTC, in a decision dated 14 October 2009, reversed and set aside the MeTC decision. The RTC held that PSB failed to prove the due execution and existence of the promissory note and that Papa’s pleading did not constitute an admission of the note’s contents or execution. The RTC therefore found that PSB failed to prove its cause of action.

Post-judgment Motions and Service Dispute

PSB filed a motion for reconsideration on 10 November 2009. Papa opposed and maintained that the RTC decision had attained finality because PSB served its motion by private courier and did not comply with the modes and proof of service required by the Rules of Court. PSB admitted receipt of the RTC decision on 26 October 2009.

Court of Appeals Resolution

The CA, in a decision dated 21 July 2011, affirmed the RTC decision and the subsequent RTC order denying PSB’s motion for reconsideration. The CA agreed that PSB failed to prove timely service of its motion for reconsideration and that PSB failed to prove its cause of action. The CA denied PSB’s reconsideration in a resolution dated 1 February 2012.

Issues Presented to the Supreme Court

PSB raised three principal issues: whether the CA erred in treating PSB’s appeal as dismissed on procedural grounds and thereby prejudicing PSB’s substantive right to recover; whether the CA erred in affirming that PSB failed to prove its cause of action for lack of the original promissory note; and whether the CA’s disposition resulted in unjust enrichment in favor of Papa.

Petitioner’s Contentions

PSB contended that it timely filed its motion for reconsideration on 10 November 2009 and that filing and service are distinct acts; therefore timeliness should be measured by actual filing with the RTC rather than the date of receipt by the adverse party. PSB argued that service by private courier effected effective service upon Papa’s counsel on 11 November 2009 and that the Court should liberally construe the rules or suspend them where justice so required.

Court’s Analysis of Filing and Service Requirements

The Supreme Court accepted that filing and service are distinct but emphasized that both acts must be considered together to determine timeliness. The Court reiterated that Rule 15, Section 6 requires proof of service for motions set for hearing and that Rule 13, Section 13 prescribes the proof required for personal service, ordinary mail, and registered mail. The Court treated service by private courier as analogous to ordinary mail for evidentiary purposes but held that proof of such service must include an affidavit of the person who mailed or sent the document and must demonstrate compliance with Rule 13, Section 7 where ordinary or registered mail is invoked.

Application of the Rules to the Case

PSB admitted serving the motion by private courier but failed to attach an affidavit of the person who mailed or sent it and failed to show compliance with Rule 13, Section 7. PSB did not demonstrate that registered mail service was unavailable in the localities concerned. PSB’s explanation that it used private registered mail for lack of time and personnel did not satisfy the requirements of proof and justification under the Rules. Consequently the Court concluded that PSB’s motion for reconsideration was effectively not filed.

Consequence on Appeal and Finality

Because the motion for reconsideration was deemed not filed, it did not toll the fifteen-day reglementary period for perfecting an appeal. The Court found that PSB’s appeal, filed after the expiration of the appeal period, was not validly perfected. The RTC decision therefore attained finality as of 11 November 2009. Citing settled doctrine, the Court emphasized that finality occurs by operation of law upon lapse of the reglementary period and that a final judgment becomes immutable and una

Case Syllabus (G.R. No. 200469)

Parties and Procedural Posture

PHILIPPINE SAVINGS BANK filed a complaint for collection of sum of money against JOSEPHINE L. PAPA before the Metropolitan Trial Court of Makati City, Branch 65.
The MeTC rendered a decision on 23 December 2008 in favor of PHILIPPINE SAVINGS BANK, which PAPA appealed to the Regional Trial Court, Makati City, Branch 65.
The RTC reversed the MeTC decision by judgment dated 14 October 2009 and denied petitioner’s motion for reconsideration by order dated 14 January 2010.
PHILIPPINE SAVINGS BANK filed a petition for review under Rule 42 of the Revised Rules of Court before the Court of Appeals, which affirmed the RTC decision on 21 July 2011 and denied reconsideration on 1 February 2012.
PHILIPPINE SAVINGS BANK brought the present petition for review on certiorari to the Supreme Court, which dismissed the petition for lack of merit.

Key Facts

PHILIPPINE SAVINGS BANK alleged that PAPA obtained a flexi-loan with a face amount of P207,600.00 payable in twenty-four monthly installments and that PAPA executed a promissory note dated 26 July 2005.
The promissory note allegedly stipulated interest at 38.40% per annum, three percent (3%) late payment charge per month, twenty-five percent (25%) attorney's fees not less than P5,000.00, and ten percent (10%) liquidated damages not less than P1,000.00.
PAPA pleaded that her liability had been extinguished by several staggered payments and she forewent presentation of evidence during trial, electing to file a memorandum.
PHILIPPINE SAVINGS BANK introduced a photocopy of the promissory note in evidence, which the MeTC admitted over PAPA’s objection.
The MeTC found PHILIPPINE SAVINGS BANK proved its cause of action and awarded P173,000.00 plus 12% interest per annum from February 9, 2006, attorney’s fees of P20,000.00, and costs.

MeTC Ruling

The MeTC found that PHILIPPINE SAVINGS BANK established its cause of action by preponderance of evidence.
The MeTC deemed equitable to award interest at 12% per annum instead of the stipulated contractual rate and imposed attorney’s fees of P20,000.00 plus costs.
The MeTC ruled that PAPA failed to present evidence to substantiate her allegation of prior payments.

RTC Ruling

The RTC reversed and set aside the MeTC decision on 14 October 2009 for failure of PHILIPPINE SAVINGS BANK to prove the existence and due execution of the promissory note.
The RTC held that PAPA’s Answer could not be construed as an admission of the genuineness or due execution of the promissory note or of the terms alleged therein.
The RTC concluded that PHILIPPINE SAVINGS BANK failed to establish that PAPA violated any term or condition of the promissory note.

CA Ruling

The Court of Appeals affirmed the RTC decision on 21 July 2011 and denied reconsideration by resolution dated 1 February 2012.
The CA ruled that the RTC judgment attained finality because PHILIPPINE SAVINGS BANK failed to effect timely service of its motion for reconsideration within the prescribed period.
The CA agreed with the RTC that PHILIPPINE SAVINGS BANK did not prove its cause of action because PAPA never admitted the contents or due execution of the promissory note.

Issues Presented

Whether the Court of Appeals committed reversible error by dismissing petitioner’s appeal on procedural grounds and thereby prejudicing petitioner’s substantive right to recover the unpaid loan.
Whether the Court of Appeals erred in affirming the lower courts’ finding that PHILIPPIN