G.R. No. 151170 - Victory Liner, Inc. vs. Malinias

Case Summary (G.R. No. 151170)

Petitioner

Victory Liner, Inc., a corporate bus company, defended against a claim for damages to an Isuzu truck and related claims for lost income, exemplary damages, and attorney’s fees. Corporate authorization issues later affected the validity of procedural certifications in appellate pleadings.

Respondent

Michael Malinias sued Victory Liner and the bus driver for pecuniary damages (P47,180.00 for truck damage and lost income and P15,000.00 for repairs were alleged), plus exemplary damages and attorney’s fees. He prevailed in the trial court and sought execution of that judgment after it was declared final and executory.

Key Dates

Vehicular collision: 19 March 1996.
MTC judgment in favor of respondent: 13 January 1998 (award P82,180.00).
MTC Order declaring judgment final/executory: 23 February 1998.
MTC ruling on Notice of Appeal being filed beyond period: 28 September 1999.
Petition for Relief from Judgment filed by petitioner: 25 October 1999 (denied 13 March 2000).
RTC order directing issuance of writ of execution: 21 June 2001 (received by petitioner 3 July 2001).
Petition for annulment filed in Court of Appeals: 17 July 2001 (dismissed 26 July 2001; motion denied 5 December 2001).
Supreme Court decision: May 29, 2007 (case decision date indicates application of the 1987 Constitution and the 1997 Rules of Civil Procedure).

Applicable Law

Primary procedural authorities invoked in the decision: the 1997 Rules of Civil Procedure (notably Rules 15, 38, 40, 41, 47, 48, and 65), the Revised Rules of Court (as referenced), and controlling jurisprudence cited in the record concerning substantial compliance with verification and certification requirements. The 1987 Constitution is the governing constitution applicable to the decision by virtue of the decision date.

Factual and Procedural Background at Trial

After the collision respondent filed a complaint in the MTC. The bus driver was dismissed as a defendant by consent when summons could not be served and respondent waived action against him. At trial respondent presented his evidence and rested. Petitioner’s counsel moved to withdraw but the motion lacked petitioner’s signed conformity and was denied. On the scheduled date for petitioner’s evidence (27 October 1997) no one appeared for the bus company; respondent moved to deem petitioner to have waived its right to present evidence and to have the case submitted for decision. The MTC found waiver and treated the case as submitted as of 27 October 1997. The MTC then rendered judgment for respondent on 13 January 1998.

Defect in Motion for Reconsideration and Finality of Judgment

Petitioner filed a Motion for Reconsideration that contained a Notice of Hearing which failed to specify the time and date of the hearing, contravening Sections 5 and 6 of Rule 15 (1997 Rules of Civil Procedure). The MTC ruled the notice nonconforming and treated the motion as a "mere scrap of paper" that did not suspend or toll the reglementary period to appeal. On that basis the MTC declared its January 1998 judgment final and executory and granted respondent’s motion for issuance of a writ of execution.

Notice of Appeal and MTC’s Delay in Acting

Petitioner filed a Notice of Appeal and moved for the inhibition of the MTC judge; the judge was inhibited and the case was reassigned. The new MTC judge took eighteen months to act and ultimately ruled (28 September 1999) that the Notice of Appeal was filed beyond the reglementary period because the defective Motion for Reconsideration did not toll the appeal period. The protracted delay by the MTC in acting on the Notice was described by the Supreme Court as "close to scandalous" but the delay did not cure the jurisdictional/temporal defect that rendered the appeal ineffective.

Petitioner’s Subsequent Remedies and Lower Courts’ Rulings

Petitioner pursued multiple avenues after the MTC declared the judgment final:

Petition for Relief from Judgment (Rule 38) filed 25 October 1999 — denied by MTC (Order dated 13 March 2000) for being untimely (petitioner did not meet the 60-day/6-month limits of Section 3, Rule 38). Motion for reconsideration of that denial was also denied.
Petition for certiorari under Rule 65 filed in the RTC on 26 June 2000 — dismissed by the RTC on 21 November 2000 for lack of grave abuse of discretion by the MTC and because many of the issues were untimely as certiorari must normally be filed within 60 days.
The RTC subsequently (21 June 2001) directed issuance of a writ of execution, which petitioner received 3 July 2001.
Petitioner then filed a petition for annulment of judgment in the Court of Appeals on 17 July 2001 (styled under Rule 47). The CA dismissed the petition outright on 26 July 2001 because the verification and the certification against forum-shopping were signed by counsel and not by the corporate petitioner itself (the CA held the verification/certificate should be signed by the petitioner and noted petitioner’s failure to attach a certificate of authority at the time). Petitioner submitted a certificate of authority on 18 July 2001 and later sought reconsideration of the CA dismissal; the CA denied reconsideration on 5 December 2001, also holding that the extrinsic fraud ground had been or could have been availed of in earlier remedies.

Court of Appeals’ Grounds for Dismissal and Supreme Court’s Correction on Certification/Verification

The Court of Appeals dismissed the annulment petition primarily on two grounds: (1) defective verification and certification against forum-shopping because counsel signed instead of the petitioner (and the certificate of authority was submitted only after filing); and (2) reliance on extrinsic fraud as a ground when such a ground had been or could have been availed in prior motions such as the petition for relief from judgment. The Supreme Court found the CA’s emphasis on the belated submission of the certificate of authority to be legally flawed because the Certificate of Authority (executed by petitioner’s corporate secretary and dated 17 July 2001) established that counsel had been duly authorized before the petition was filed on 17 July 2001. The Court noted that corporations are not required to maintain the same authorized representative perpetually and that a new authorization issued prior to filing suffices. The Court observed that the failure to attach the certificate at filing was a procedural error but could be evaluated under the principle of substantial compliance in appropriate circumstances. The Court cited precedents recognizing that substantial compliance may cure defects in verification and certification in certain situations and reiterated that verification is formal rather than jurisdictional.

Supreme Court’s Assessment of the Extrinsic Fraud Ground and Procedural Options

Although the Court identified error in the CA’s handling of the certification/verification defect, it nonetheless recognized fundamental and repeated procedural failures by petitioner that made relief inappropriate. The Court explained: (a) a motion for reconsideration without a proper notice of hearing is pro forma and does not toll appeal periods; (b) once the trial court properly declared the judgment final and executory, a notice of appeal is not the proper means to reinstate an extinguished right to appeal; (c) the appropriate remedies at that juncture included (i) a special civil action for certiorari (Rule 65) asserting

Case Syllabus (G.R. No. 151170)

Case Citation and Dispositive Result

Reported at 551 Phil. 273, Second Division; G.R. No. 151170; Decision promulgated May 29, 2007; penned by Justice Tinga.
Final disposition: Petition for review under Rule 45 DENIED. Costs against petitioner. "SO ORDERED."

Parties and Vehicles Involved

Petitioner: Victory Liner, Inc. (bus owner).
Respondent: Michael Malinias (user or usufructuary of an Isuzu truck; registered owner of the truck was Lina Malinias).
Bus driver initially named as defendant: Leoncio Bulaong (later dropped as defendant when summons could not be served and respondent waived cause of action against him).

Factual Background — The Collision and Claims

Vehicular collision occurred on 19 March 1996 in La Union between a petitioner-owned bus and an Isuzu truck used by respondent Michael Malinias.
No fatalities resulted; both vehicles sustained damage.
Respondent instituted a complaint for sum of money and damages with the Municipal Trial Court (MTC) of La Trinidad, Benguet (docketed Civil Case No. R-370), alleging:
- Pecuniary damage to the truck in the amount of P47,180.00, representing lost income for non-use while undergoing repairs.
- Repairs to the truck in the amount of P15,000.00 (as part of claimed pecuniary losses).
- Claims for exemplary damages and attorney's fees were also included.

Trial Proceedings at the MTC — Key Events and Judgment

After pre-trial, the bus driver was dropped as defendant because summons could not be served and respondent waived his cause of action against the driver.
During trial, respondent completed presentation of evidence and rested.
Petitioner’s counsel filed a motion to withdraw as counsel; the MTC denied the motion on 15 September 1997 because the motion lacked the petitioner’s signature of conformity.
On the scheduled date of 27 October 1997, petitioner did not appear to present its evidence.
- Respondent moved that petitioner be declared to have waived its right to adduce evidence and that the case be deemed submitted for judgment.
- The MTC found merit in respondent’s motion and ordered the case deemed submitted for decision as of 27 October 1997.
On 13 January 1998, the MTC rendered judgment in favor of respondent, awarding him P82,180.00.

Motion for Reconsideration — Defective Notice of Hearing and Legal Consequences

Petitioner, through new counsel, filed a Motion for Reconsideration.
- The Notice of Hearing stated: "Please submit the foregoing Motion for Reconsideration for hearing before the Honorable Court at a schedule and time convenient to this Honorable Court and the parties."
On 23 February 1998, the MTC ruled the notice did not conform to mandatory requirements of Section 5, Rule 15 of the 1997 Rules of Civil Procedure (did not specify time and date); the motion was deemed "a mere scrap of paper" and did not suspend the period to appeal.
The MTC declared its 13 January 1998 judgment final and executory and granted respondent’s Motion for Issuance of Writ of Execution.

Notice of Appeal, Inhibition, and MTC Delay

Petitioner filed a Notice of Appeal and a motion for inhibition of the MTC judge; the inhibition was granted and a new MTC judge was assigned to rule on the Notice of Appeal.
The MTC did not act on the Notice of Appeal until 28 September 1999 — eighteen (18) months after filing — and then ruled the Notice of Appeal had been filed beyond the reglementary period, reiterating the 13 January 1998 judgment had long become final and executory.

Petitioner’s Subsequent Attempts to Set Aside or Stay the Judgment — Chronology and Outcomes

First attempt: Petition for Relief from Judgment filed with the MTC on 25 October 1999.
- The MTC denied this petition in an Order dated 13 March 2000 as filed out of time.
- The MTC explained the petition for relief from judgment must have been filed either within sixty (60) days from the date petitioner’s new counsel learned of the judgment, or sixty (60) days after learning the Motion for Reconsideration had been denied as filed out of time — neither was satisfied.
- The MTC also denied petitioner’s Motion for Reconsideration of that denial.
Second attempt: Petition for certiorari under Rule 65 filed with the Regional Trial Court (RTC) of La Trinidad, Benguet on 26 June 2000.
- Petitioner alleged grave abuse of discretion by the MTC and sought to annul four MTC rulings: the original 1998 judgment; the 1999 order declaring the Notice of Appeal late; and the two orders dismissing the petition for relief from judgment.
- The RTC dismissed the certiorari petition in an Order dated 21 November 2000, agreeing that the Petition for Relief from Judgment had been belatedly filed and reiterating the judgment had become final in February 1998; thus no grave abuse was found.
- Petitioner filed a motion for reconsideration at the RTC.
Execution by respondent:
- Respondent filed a motion for execution with the RTC.
- On 3 July 2001 petitioner received an Order dated 21 June 2001 directing the issuance of a writ of execution in favor of respondent as the MTC judgment had become final and executory.

Petition for Annulment of Judgment with the Court of Appeals (Rule 47) — Filing and Defects Alleged

On 17 July 2001 petitioner filed a "Petition for Certiorari to Annul Judgment" under Rule 47 with the Court of Appeals.
- The petition, by its first paragraph and express prayer, primarily sought annulment of two RTC orders (the RTC Order dated 4 December 2000 dismissing certiorari and the RTC Order dated 21 June 2001 directing issuance of writ of execution) rather than the original final MTC judgment.
- The petition nonetheless stated petitioner sought annulment of judgments and orders of both RTC and MTC, but the identified issues pertained mainly to alleged errors and grave abuse of discretion by the RTC.
- A general allegation was made that the RTC’s issuance of the writ of execution before acting on petitioner’s motion for reconsideration amounted to extrinsic fraud, but the petition offered no particularized arguments explaining why.

Court of Appeals Dismissal — Verification and Certification Against Forum Shopping

The petition for annulment was accompanied by a Verification and Certification Against Forum Shopping signed by counsel for petitioner (not by the petitioner itself).
The Court of Appeals dismissed the petition outright in a Resolution dated 26 July 2001, citing the rule that the petitioner, not counsel, should execute the verification and the certification against forum shopping.
- Resolution authored by Associate Justice E. Labitoria, concurred in by Associate Justices E. Bello, Jr. and P. Tria Tirona.
Petitioner filed a Motion for Reconsideration and explained it had simultaneously filed a Motion for Extension to submit Certificate of Authority to file the petition.
- Petitioner submitted on 18 July 2001 (the day after filing the petition) a Certificate of Authority (prepared by petitioner’s corporate secretary, dated 17 July 2001) certifying that on 10 July 2001 the board authorized counsel to file "the necessary action, petition or any other pleadings necessary in any and all hierarchy of courts" with respect to the case.
The Court of Appeals denied the Motion for Reconsideration in a Resolution dated 5 December 2001.
- The CA observed counsel claimed she was constrained to sign the verification because the certificate of aut
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