THIRD DIVISIONG.R. No. 138822 January 23, 2001EVANGELINE
ALDAY,petitioner,vs.FGU INSURANCE
CORPORATION,respondent.GONZAGA-REYES,J.:On 5 May 1989, respondent
FGU Insurance Corporation filed a complaint with the Regional Trial
Court of Makati1alleging that petitioner Evangeline K. Alday owed
it P114,650.76, representing unliquidated cash advances, unremitted
costs of premiums and other charges incurred by petitioner in the
course of her work as an insurance agent for respondent.2Respondent
also prayed for exemplary damages, attorney's fees, and costs of
suit.3Petitioner filed her answer and by way of counterclaim,
asserted her right for the payment of P104,893.45, representing
direct commissions, profit commissions and contingent bonuses
earned from 1 July 1986 to 7 December 1986, and for accumulated
premium reserves amounting to P500,000.00. In addition, petitioner
prayed for attorney's fees, litigation expenses, moral damages and
exemplary damages for the allegedly unfounded action filed by
respondent.4On 23 August 1989, respondent filed a "Motion to Strike
Out Answer With Compulsory Counterclaim And To Declare Defendant In
Default" because petitioner's answer was allegedly filed out of
time.5However, the trial court denied the motion on 25 August 1989
and similarly rejected respondent's motion for reconsideration on
12 March 1990.6A few weeks later, on 11 April 1990, respondent
filed a motion to dismiss petitioner's counterclaim, contending
that the trial court never acquired jurisdiction over the same
because of the non-payment of docket fees by petitoner.7In
response, petitioner asked the trial court to declare her
counterclaim as exempt from payment of docket fees since it is
compulsory and that respondent be declared in default for having
failed to answer such counterclaim.8In its 18 September 1990 Order,
the trial court9granted respondent's motion to dismiss petitioner's
counterclaim and consequently, denied petitioner's motion. The
court found petitioner's counterclaim to be merely permissive in
nature and held that petitioner's failure to pay docket fees
prevented the court from acquiring jurisdiction over the same.10The
trial court similar denied petitioner's motion for reconsideration
on 28 February 1991.1wphi1.ntOn 23 December 1998, the Court of
Appeals11sustained the trial court, finding that petitioner's own
admissions, as contained in her answer, show that her counterclaim
is merely permissive. The relevant portion of the appellate court's
decision12is quoted herewith -Contrary to the protestations of
appellant, mere reading of the allegations in the answera quowill
readily show that her counterclaim can in no way be compulsory.
Take note of the following numbered paragraphs in her answer:"(14)
That, indeed, FGU's cause of action which is not supported by any
document other than the self-serving 'Statement of Account' dated
March 28, 1988 x x x(15) That it should be noted that the cause of
action of FGU is not the enforcement of the Special Agent's
Contract but the alleged 'cash accountabilities which are not based
on written agreement x x x.xxxx(19) x x x A careful analysis of
FGU's three-page complaint will show that its cause of action is
not for specific performance or enforcement of the Special Agent's
Contract rather, it is for the payment of the alleged cash
accountabilities incurred by defendant during the period form [sic]
1975 to 1986 which claim is executory and has not been ratified. It
is the established rule that unenforceable contracts, like this
purported money claim of FGU, cannot be sued upon or enforced
unless ratified, thus it is as if they have no effect. x x x."To
support the heading "Compulsory Counterclaim" in her answer and
give the impression that the counterclaim is compulsory appellant
alleged that "FGU has unjustifiably failed to remit to defendant
despite repeated demands in gross violation of their Special
Agent's Contract x x x." The reference to said contract was
included purposely to mislead. While on one hand appellant alleged
that appellee's cause of action had nothing to do with the Special
Agent's Contract, on the other hand, she claim that FGU violated
said contract which gives rise of [sic] her cause of action.
Clearly, appellant's cash accountabilities cannot be the offshoot
of appellee's alleged violation of the aforesaid contract.On 19 May
1999, the appellate court denied petitioner's motion for
reconsideration,13giving rise to the present petition.Before going
into the substantive issues, the Court shall first dispose of some
procedural matters raised by the parties. Petitioner claims that
respondent is estopped from questioning her non-payment of docket
fees because it did not raise this particular issue when it filed
its motion - the "Motion to Strike out Answer With Compulsory
Counterclaim And To Declare Defendant In Default" - with the trial
court; rather, it was only nine months after receiving petitioner's
answer that respondent assailed the trial court's lack of
jurisdiction over petitioner's counterclaims based on the latter's
failure to pay docket fees.14Petitioner's position is
unmeritorious. Estoppel by laches arises from the negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has
abandoned or declined to assert it.15In the case at bar, respondent
cannot be considered as estopped from assailing the trial court's
jurisdiction over petitioner's counterclaim since this issue was
raised by respondent with the trial court itself - the body where
the action is pending - even before the presentation of any
evidence by the parties and definitely, way before any judgment
could be rendered by the trial court.Meanwhile, respondent
questions the jurisdiction of the Court of Appeals over the appeal
filed by petitioner from the 18 September 1990 and 28 February 1991
orders of the trial court. It is significant to note that this
objection to the appellate court's jurisdiction is raised for the
first time before this Court; respondent never having raised this
issue before the appellate court. Although the lack of jurisdiction
of a court may be raised at any stage of the action, a party may be
estopped from raising such questions if he has actively taken part
in the very proceedings which he questions, belatedly objecting to
the court's jurisdiction in the event that the judgment or order
subsequently rendered is adverse to him.16In this case, respondent
actively took part in the proceedings before the Court of Appeals
by filing its appellee's brief with the same.17Its participation,
when taken together with its failure to object to the appellate
court's jurisdiction during the entire duration of the proceedings
before such court, demonstrates a willingness to abide by the
resolution of the case by such tribunal and accordingly, respondent
is now most decidedly estopped from objecting to the Court of
Appeals' assumption of jurisdiction over petitioner's appeal.18The
basic issue for resolution in this case is whether or not the
counterclaim of petitioner is compulsory or permissive in nature. A
compulsory counterclaim is one which, being cognizable by the
regular courts of justice, arises out of or is connected with the
transaction or occurrence constituting the subject matter of the
opposing party's claim and does not require for its adjudication
the presence of third parties of whom the court cannot acquire
jurisdiction.19InValencia v. Court of Appeals,20this Court
capsulized the criteria or tests that may be used in determining
whether a counterclaim is compulsory or permissive, summarized as
follows:1. Are theissues of fact and lawraised by the claim and
counterclaim largely the same?2. Wouldres judicatabar a subsequent
suit on defendant's claim absent the compulsory counterclaim
rule?3. Willsubstantially the same evidencesupport or refute
plaintiff's claim as well s defendant's counterclaim?4. Is there
anylogical relationbetween the claim and the counterclaim?Another
test, applied in the more recent case ofQuintanilla v. Court of
Appeals,21is the "compelling test of compulsoriness" which requires
"a logical relationship between the claim and counterclaim, that
is, where conducting separate trials of the respective claims of
the parties would entail a substantial duplication of effort and
time by the parties and the court."As contained in her answer,
petitioner's counterclaims are as follows:(20) That defendant
incorporates and repleads by reference all the foregoing
allegations as may be material to her Counterclaim against FGU.(21)
That FGU is liable to pay the following just, valid and legitimate
claims of defendant:(a) the sum of at least P104,893.45 plus
maximum interest thereon representing, among others, direct
commissions, profit commissions and contingent bonuses legally due
to defendant; and(b) the minimum amount of P500,000.00 plus the
maximum allowable interest representing defendant's accumulated
premium reserve for 1985 and previous years,which FGU has
unjustifiably failed to remit to defendant despite repeated demands
in gross violation of their Special Agent's Contract and in
contravention of the principle of law that "every person must, in
the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and
good faith."(22) That as a result of the filing of this patently
baseless, malicious and unjustified Complaint, and FGU's unlawful,
illegal and vindictive termination of their Special Agent's
Contract, defendant was unnecessarily dragged into this litigation
and to defense [sic] her side and assert her rights and claims
against FGU, she was compelled to hire the services of counsel with
whom she agreed to pay the amount of P30,000.00 as and for
attorney's fees and stands to incur litigation expenses in the
amount estimated to at least P20,000.00 and for which FGU should be
assessed and made liable to pay defendant.(23) That considering
further the malicious and unwarranted action of defendant in filing
this grossly unfounded action, defendant has suffered and continues
to suffer from serious anxiety, mental anguish, fright and
humiliation. In addition to this, defendant's name, good reputation
and business standing in the insurance business as well as in the
community have been besmirched and for which FGU should be adjudged
and made liable to pay moral damages to defendant in the amount of
P300,000.00 as minimum.(24) That in order to discourage the filing
of groundless and malicious suits like FGU's Complaint, and by way
of serving [as] an example for the public good, FGU should be
penalized and assessed exemplary damages in the sum of P100,000.00
or such amount as the Honorable Court may deem warranted under the
circumstances.22Tested against the abovementioned standards,
petitioner's counterclaim for commissions, bonuses, and accumulated
premium reserves is merely permissive. The evidence required to
prove petitioner's claims differs from that needed to establish
respondent's demands for the recovery of cash accountabilities from
petitioner, such as cash advances and costs of premiums. The
recovery of respondent's claims is not contingent or dependent upon
establishing petitioner's counterclaim, such that conducting
separate trials will not result in the substantial duplication of
the time and effort of the court and the parties. One would search
the records in vain for a logical connection between the parties'
claims. This conclusion is further reinforced by petitioner's own
admissions since she declared in her answer that respondent's cause
of action, unlike her own, was not based upon the Special Agent's
Contract.23However, petitioner's claims for damages, allegedly
suffered as a result of the filing by respondent of its complaint,
are compulsory.24There is no need for need for petitioner to pay
docket fees for her compulsory counterclaim.25On the other hand, in
order for the trial court to acquire jurisdiction over her
permissive counterclaim, petitioner is bound to pay the prescribed
docket fees.26The rule on the payment of filing fees has been laid
down by the Court in the case ofSun Insurance Office, Ltd. V. Hon.
Maximiano Asuncion27-1. It is not simply the filing of the
complaint or appropriate initiatory pleading, but the payment of
the prescribed docket fee, that vests a trial court with
jurisdiction over the subject-matter or nature of the action. Where
the filing of the initiatory pleading is not accompanied by payment
of the docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable prescriptive
or reglementary period.2. The same rule applies to permissive
counterclaims, third-party claims and similar pleadings, which
shall not be considered filed until and unless the filing fee
prescribed therefor is paid. The court may allow payment of said
fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.3. Where the trial
court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the
pleading, or if specified the same has been left for determination
by the court, the additional filing fee therefor shall constitute a
lien on the judgment. It shall be the responsibility of the Clerk
of Court or his duly authorized deputy to enforce said lien and
assess and collect the additional fee.The above mentioned ruling
inSun Insurancehas been reiterated in the recent case ofSusan v.
Court of Appeals.28InSuson, the Court explained that although the
payment of the prescribed docket fees is a jurisdictional
requirement, its non-payment does not result in the automatic
dismissal of the case provided the docket fees are paid within the
applicable prescriptive or reglementary period. Coming now to the
case at bar, it has not been alleged by respondent and there is
nothing in the records to show that petitioner has attempted to
evade the payment of the proper docket fees for her permissive
counterclaim. As a matter of fact, after respondent filed its
motion to dismiss petitioner's counterclaim based on her failure to
pay docket fees, petitioner immediately filed a motion with the
trial court, asking it to declare her counterclaim as compulsory in
nature and therefore exempt from docket fees and, in addition, to
declare that respondent was in default for its failure to answer
her counterclaim.29However, the trial court dismissed petitioner's
counterclaim. Pursuant to this Court's ruling inSun Insurance, the
trial court should have instead given petitioner a reasonable time,
but in no case beyond the applicable prescriptive or reglementary
period, to pay the filing fees for her permissive
counterclaim.Petitioner asserts that the trial court should have
declared respondent in default for having failed to answer her
counterclaim.30Insofar as the permissive counterclaim of petitioner
is concerned, there is obviously no need to file an answer until
petitioner has paid the prescribed docket fees for only then shall
the court acquire jurisdiction over such claim.31Meanwhile, the
compulsory counterclaim of petitioner for damages based on the
filing by respondent of an allegedly unfounded and malicious suit
need not be answered since it is inseparable from the claims of
respondent. If respondent were to answer the compulsory
counterclaim of petitioner, it would merely result in the former
pleading the same facts raised in its complaint.32WHEREFORE,the
assailed Decision of the Court of Appeals promulgated on 23
December 1998 and its 19 May 1999 Resolution are herebyMODIFIED.
The compulsory counterclaim of petitioner for damages filed in
Civil Case No. 89-3816 is orderedREINSTATED. Meanwhile, the
Regional Trial Court of Makati (Branch 134) is ordered to require
petitioner to pay the prescribed docket fees for her permissive
counterclaim (direct commissions, profit commissions, contingent
bonuses and accumulated premium reserves), after ascertaining that
the applicable prescriptive period has not yet set in.33SO
ORDERED.1wphi1.nt
SECOND DIVISIONG.R. No. 143581 January 7, 2008KOREA TECHNOLOGIES
CO., LTD.,petitioner,vs.HON. ALBERTO A. LERMA, in his capacity as
Presiding Judge of Branch 256 of Regional Trial Court of Muntinlupa
City, and PACIFIC GENERAL STEEL MANUFACTURING
CORPORATION,respondents.D E C I S I O NVELASCO, JR.,J.:In our
jurisdiction, the policy is to favor alternative methods of
resolving disputes, particularly in civil and commercial disputes.
Arbitration along with mediation, conciliation, and negotiation,
being inexpensive, speedy and less hostile methods have long been
favored by this Court. The petition before us puts at issue an
arbitration clause in a contract mutually agreed upon by the
parties stipulating that they would submit themselves to
arbitration in a foreign country. Regrettably, instead of hastening
the resolution of their dispute, the parties wittingly or
unwittingly prolonged the controversy.Petitioner Korea Technologies
Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the
supply and installation of Liquefied Petroleum Gas (LPG) Cylinder
manufacturing plants, while private respondent Pacific General
Steel Manufacturing Corp. (PGSMC) is a domestic corporation.On
March 5, 1997, PGSMC and KOGIES executed a Contract1whereby KOGIES
would set up an LPG Cylinder Manufacturing Plant in Carmona,
Cavite. The contract was executed in the Philippines. On April 7,
1997, the parties executed, in Korea, an Amendment for Contract No.
KLP-970301 dated March 5, 19972amending the terms of payment. The
contract and its amendment stipulated that KOGIES will ship the
machinery and facilities necessary for manufacturing LPG cylinders
for which PGSMC would pay USD 1,224,000. KOGIES would install and
initiate the operation of the plant for which PGSMC bound itself to
pay USD 306,000 upon the plants production of the 11-kg. LPG
cylinder samples. Thus, the total contract price amounted to USD
1,530,000.On October 14, 1997, PGSMC entered into a Contract of
Lease3with Worth Properties, Inc. (Worth) for use of Worths
5,079-square meter property with a 4,032-square meter warehouse
building to house the LPG manufacturing plant. The monthly rental
was PhP 322,560 commencing on January 1, 1998 with a 10% annual
increment clause. Subsequently, the machineries, equipment, and
facilities for the manufacture of LPG cylinders were shipped,
delivered, and installed in the Carmona plant. PGSMC paid KOGIES
USD 1,224,000.However, gleaned from the Certificate4executed by the
parties on January 22, 1998, after the installation of the plant,
the initial operation could not be conducted as PGSMC encountered
financial difficulties affecting the supply of materials, thus
forcing the parties to agree that KOGIES would be deemed to have
completely complied with the terms and conditions of the March 5,
1997 contract.For the remaining balance of USD306,000 for the
installation and initial operation of the plant, PGSMC issued two
postdated checks: (1) BPI Check No. 0316412 dated January 30, 1998
for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30,
1998 for PhP 4,500,000.5When KOGIES deposited the checks, these
were dishonored for the reason "PAYMENT STOPPED." Thus, on May 8,
1998, KOGIES sent a demand letter6to PGSMC threatening criminal
action for violation ofBatas Pambansa Blg.22 in case of nonpayment.
On the same date, the wife of PGSMCs President faxed a letter dated
May 7, 1998 to KOGIES President who was then staying at a Makati
City hotel. She complained that not only did KOGIES deliver a
different brand of hydraulic press from that agreed upon but it had
not delivered several equipment parts already paid for.On May 14,
1998, PGSMC replied that the two checks it issued KOGIES were fully
funded but the payments were stopped for reasons previously made
known to KOGIES.7On June 1, 1998, PGSMC informed KOGIES that PGSMC
was canceling their Contract dated March 5, 1997 on the ground that
KOGIES had altered the quantity and lowered the quality of the
machineries and equipment it delivered to PGSMC, and that PGSMC
would dismantle and transfer the machineries, equipment, and
facilities installed in the Carmona plant. Five days later, PGSMC
filed before the Office of the Public Prosecutor an
Affidavit-Complaint forEstafadocketed as I.S. No. 98-03813 against
Mr. Dae Hyun Kang, President of KOGIES.On June 15, 1998, KOGIES
wrote PGSMC informing the latter that PGSMC could not unilaterally
rescind their contract nor dismantle and transfer the machineries
and equipment on mere imagined violations by KOGIES. It also
insisted that their disputes should be settled by arbitration as
agreed upon in Article 15, the arbitration clause of their
contract.On June 23, 1998, PGSMC again wrote KOGIES reiterating the
contents of its June 1, 1998 letter threatening that the
machineries, equipment, and facilities installed in the plant would
be dismantled and transferred on July 4, 1998. Thus, on July 1,
1998, KOGIES instituted an Application for Arbitration before the
Korean Commercial Arbitration Board (KCAB) in Seoul, Korea pursuant
to Art. 15 of the Contract as amended.On July 3, 1998, KOGIES filed
a Complaint for Specific Performance, docketed as Civil Case No.
98-1178against PGSMC before the Muntinlupa City Regional Trial
Court (RTC). The RTC granted a temporary restraining order (TRO) on
July 4, 1998, which was subsequently extended until July 22, 1998.
In its complaint, KOGIES alleged that PGSMC had initially admitted
that the checks that were stopped were not funded but later on
claimed that it stopped payment of the checks for the reason that
"their value was not received" as the former allegedly breached
their contract by "altering the quantity and lowering the quality
of the machinery and equipment" installed in the plant and failed
to make the plant operational although it earlier certified to the
contrary as shown in a January 22, 1998 Certificate. Likewise,
KOGIES averred that PGSMC violated Art. 15 of their Contract, as
amended, by unilaterally rescinding the contract without resorting
to arbitration. KOGIES also asked that PGSMC be restrained from
dismantling and transferring the machinery and equipment installed
in the plant which the latter threatened to do on July 4, 1998.On
July 9, 1998, PGSMC filed an opposition to the TRO arguing that
KOGIES was not entitled to the TRO since Art. 15, the arbitration
clause, was null and void for being against public policy as it
ousts the local courts of jurisdiction over the instant
controversy.On July 17, 1998, PGSMC filed its Answer with
Compulsory Counterclaim9asserting that it had the full right to
dismantle and transfer the machineries and equipment because it had
paid for them in full as stipulated in the contract; that KOGIES
was not entitled to the PhP 9,000,000 covered by the checks for
failing to completely install and make the plant operational; and
that KOGIES was liable for damages amounting to PhP 4,500,000 for
altering the quantity and lowering the quality of the machineries
and equipment. Moreover, PGSMC averred that it has already paid PhP
2,257,920 in rent (covering January to July 1998) to Worth and it
was not willing to further shoulder the cost of renting the
premises of the plant considering that the LPG cylinder
manufacturing plant never became operational.After the parties
submitted their Memoranda, on July 23, 1998, the RTC issued an
Order denying the application for a writ of preliminary injunction,
reasoning that PGSMC had paid KOGIES USD 1,224,000, the value of
the machineries and equipment as shown in the contract such that
KOGIES no longer had proprietary rights over them. And finally, the
RTC held that Art. 15 of the Contract as amended was invalid as it
tended to oust the trial court or any other court jurisdiction over
any dispute that may arise between the parties. KOGIES prayer for
an injunctive writ was denied.10The dispositive portion of the
Order stated:WHEREFORE, in view of the foregoing consideration,
this Court believes and so holds that no cogent reason exists for
this Court to grant the writ of preliminary injunction to restrain
and refrain defendant from dismantling the machineries and
facilities at the lot and building of Worth Properties,
Incorporated at Carmona, Cavite and transfer the same to another
site: and therefore denies plaintiffs application for a writ of
preliminary injunction.On July 29, 1998, KOGIES filed its Reply to
Answer and Answer to Counterclaim.11KOGIES denied it had altered
the quantity and lowered the quality of the machinery, equipment,
and facilities it delivered to the plant. It claimed that it had
performed all the undertakings under the contract and had already
produced certified samples of LPG cylinders. It averred that
whatever was unfinished was PGSMCs fault since it failed to procure
raw materials due to lack of funds. KOGIES, relying onChung Fu
Industries (Phils.), Inc. v. Court of Appeals,12insisted that the
arbitration clause was without question valid.After KOGIES filed a
Supplemental Memorandum with Motion to Dismiss13answering PGSMCs
memorandum of July 22, 1998 and seeking dismissal of PGSMCs
counterclaims, KOGIES, on August 4, 1998, filed its Motion for
Reconsideration14of the July 23, 1998 Order denying its application
for an injunctive writ claiming that the contract was not merely
for machinery and facilities worth USD 1,224,000 but was for the
sale of an "LPG manufacturing plant" consisting of "supply of all
the machinery and facilities" and "transfer of technology" for a
total contract price of USD 1,530,000 such that the dismantling and
transfer of the machinery and facilities would result in the
dismantling and transfer of the very plant itself to the great
prejudice of KOGIES as the still unpaid owner/seller of the plant.
Moreover, KOGIES points out that the arbitration clause under Art.
15 of the Contract as amended was a valid arbitration stipulation
under Art. 2044 of the Civil Code and as held by this Court inChung
Fu Industries (Phils.), Inc.15In the meantime, PGSMC filed a Motion
for Inspection of Things16to determine whether there was indeed
alteration of the quantity and lowering of quality of the
machineries and equipment, and whether these were properly
installed. KOGIES opposed the motion positing that the queries and
issues raised in the motion for inspection fell under the coverage
of the arbitration clause in their contract.On September 21, 1998,
the trial court issued an Order (1) granting PGSMCs motion for
inspection; (2) denying KOGIES motion for reconsideration of the
July 23, 1998 RTC Order; and (3) denying KOGIES motion to dismiss
PGSMCs compulsory counterclaims as these counterclaims fell within
the requisites of compulsory counterclaims.On October 2, 1998,
KOGIES filed an Urgent Motion for Reconsideration17of the September
21, 1998 RTC Order granting inspection of the plant and denying
dismissal of PGSMCs compulsory counterclaims.Ten days after, on
October 12, 1998, without waiting for the resolution of its October
2, 1998 urgent motion for reconsideration, KOGIES filed before the
Court of Appeals (CA) a petition for certiorari18docketed as
CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998 and
September 21, 1998 RTC Orders and praying for the issuance of writs
of prohibition, mandamus, and preliminary injunction to enjoin the
RTC and PGSMC from inspecting, dismantling, and transferring the
machineries and equipment in the Carmona plant, and to direct the
RTC to enforce the specific agreement on arbitration to resolve the
dispute.In the meantime, on October 19, 1998, the RTC denied KOGIES
urgent motion for reconsideration and directed the Branch Sheriff
to proceed with the inspection of the machineries and equipment in
the plant on October 28, 1998.19Thereafter, KOGIES filed a
Supplement to the Petition20in CA-G.R. SP No. 49249 informing the
CA about the October 19, 1998 RTC Order. It also reiterated its
prayer for the issuance of the writs of prohibition, mandamus and
preliminary injunction which was not acted upon by the CA. KOGIES
asserted that the Branch Sheriff did not have the technical
expertise to ascertain whether or not the machineries and equipment
conformed to the specifications in the contract and were properly
installed.On November 11, 1998, the Branch Sheriff filed his
Sheriffs Report21finding that the enumerated machineries and
equipment were not fully and properly installed.The Court of
Appeals affirmed the trial court and declaredthe arbitration clause
against public policyOn May 30, 2000, the CA rendered the assailed
Decision22affirming the RTC Orders and dismissing the petition for
certiorari filed by KOGIES. The CA found that the RTC did not
gravely abuse its discretion in issuing the assailed July 23, 1998
and September 21, 1998 Orders. Moreover, the CA reasoned that
KOGIES contention that the total contract price for USD 1,530,000
was for the whole plant and had not been fully paid was contrary to
the finding of the RTC that PGSMC fully paid the price of USD
1,224,000, which was for all the machineries and equipment.
According to the CA, this determination by the RTC was a factual
finding beyond the ambit of a petition for certiorari.On the issue
of the validity of the arbitration clause, the CA agreed with the
lower court that an arbitration clause which provided for a final
determination of the legal rights of the parties to the contract by
arbitration was against public policy.On the issue of nonpayment of
docket fees and non-attachment of a certificate of non-forum
shopping by PGSMC, the CA held that the counterclaims of PGSMC were
compulsory ones and payment of docket fees was not required since
the Answer with counterclaim was not an initiatory pleading. For
the same reason, the CA said a certificate of non-forum shopping
was also not required.Furthermore, the CA held that the petition
for certiorari had been filed prematurely since KOGIES did not wait
for the resolution of its urgent motion for reconsideration of the
September 21, 1998 RTC Order which was the plain, speedy, and
adequate remedy available. According to the CA, the RTC must be
given the opportunity to correct any alleged error it has
committed, and that since the assailed orders were interlocutory,
these cannot be the subject of a petition for certiorari.Hence, we
have this Petition for Review on Certiorari under Rule 45.The
IssuesPetitioner posits that the appellate court committed the
following errors:a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE
MACHINERY AND FACILITIES AS "A QUESTION OF FACT" "BEYOND THE AMBIT
OF A PETITION FOR CERTIORARI" INTENDED ONLY FOR CORRECTION OF
ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF (SIC) EXCESS OF JURISDICTION, AND CONCLUDING THAT THE TRIAL
COURTS FINDING ON THE SAME QUESTION WAS IMPROPERLY RAISED IN THE
PETITION BELOW;b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE
IN ARTICLE 15 OF THE CONTRACT BETWEEN THE PARTIES FOR BEING
"CONTRARY TO PUBLIC POLICY" AND FOR OUSTING THE COURTS OF
JURISDICTION;c. DECREEING PRIVATE RESPONDENTS COUNTERCLAIMS TO BE
ALL COMPULSORY NOT NECESSITATING PAYMENT OF DOCKET FEES AND
CERTIFICATION OF NON-FORUM SHOPPING;d. RULING THAT THE PETITION WAS
FILED PREMATURELY WITHOUT WAITING FOR THE RESOLUTION OF THE MOTION
FOR RECONSIDERATION OF THE ORDER DATED SEPTEMBER 21, 1998 OR
WITHOUT GIVING THE TRIAL COURT AN OPPORTUNITY TO CORRECT ITSELF;e.
PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998 NOT
TO BE PROPER SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING
"INTERLOCUTORY IN NATURE;"f. NOT GRANTING THE RELIEFS AND REMEDIES
PRAYED FOR IN HE (SIC) PETITION AND, INSTEAD, DISMISSING THE SAME
FOR ALLEGEDLY "WITHOUT MERIT."23The Courts RulingThe petition is
partly meritorious.Before we delve into the substantive issues, we
shall first tackle the procedural issues.The rules on the payment
of docket fees for counterclaimsand cross claims were amended
effective August 16, 2004KOGIES strongly argues that when PGSMC
filed the counterclaims, it should have paid docket fees and filed
a certificate of non-forum shopping, and that its failure to do so
was a fatal defect.We disagree with KOGIES.As aptly ruled by the
CA, the counterclaims of PGSMC were incorporated in its Answer with
Compulsory Counterclaim dated July 17, 1998 in accordance with
Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the
rule that was effective at the time the Answer with Counterclaim
was filed. Sec. 8 on existing counterclaim or cross-claim states,
"A compulsory counterclaim or a cross-claim that a defending party
has at the time he files his answer shall be contained therein."On
July 17, 1998, at the time PGSMC filed its Answer incorporating its
counterclaims against KOGIES, it was not liable to pay filing fees
for said counterclaims being compulsory in nature. We stress,
however, that effective August 16, 2004 under Sec. 7, Rule 141, as
amended by A.M. No. 04-2-04-SC, docket fees are now required to be
paid in compulsory counterclaim or cross-claims.As to the failure
to submit a certificate of forum shopping, PGSMCs Answer is not an
initiatory pleading which requires a certification against forum
shopping under Sec. 524of Rule 7, 1997 Revised Rules of Civil
Procedure. It is a responsive pleading, hence, the courtsa quodid
not commit reversible error in denying KOGIES motion to dismiss
PGSMCs compulsory counterclaims.Interlocutory orders proper subject
of certiorariCitingGamboa v. Cruz,25the CA also pronounced that
"certiorari and Prohibition are neither the remedies to question
the propriety of an interlocutory order of the trial court."26The
CA erred on its reliance onGamboa.Gamboainvolved the denial of a
motion to acquit in a criminal case which was not assailable in an
action for certiorari since the denial of a motion to quash
required the accused to plead and to continue with the trial, and
whatever objections the accused had in his motion to quash can then
be used as part of his defense and subsequently can be raised as
errors on his appeal if the judgment of the trial court is adverse
to him. The general rule is that interlocutory orders cannot be
challenged by an appeal.27Thus, inYamaoka v. Pescarich
Manufacturing Corporation, we held:The proper remedy in such cases
is an ordinary appeal from an adverse judgmentonthemerits,
incorporating in said appeal the grounds for assailing the
interlocutory orders. Allowing appeals from interlocutory orders
would result in the sorry spectacle of a case being subject of a
counterproductiveping-pongto and from the appellate court as often
as a trial court is perceived to have made an error in any of its
interlocutory rulings. However, where the assailed interlocutory
order was issued with grave abuse of discretion or patently
erroneous and the remedy of appeal would not afford adequate and
expeditious relief, the Court allows certiorari as a mode of
redress.28Also, appeals from interlocutory orders would open the
floodgates to endless occasions for dilatory motions. Thus, where
the interlocutory order was issued without or in excess of
jurisdiction or with grave abuse of discretion, the remedy is
certiorari.29The alleged grave abuse of discretion of the
respondent court equivalent to lack of jurisdiction in the issuance
of the two assailed orders coupled with the fact that there is no
plain, speedy, and adequate remedy in the ordinary course of law
amply provides the basis for allowing the resort to a petition for
certiorari under Rule 65.Prematurity of the petition before the
CANeither do we think that KOGIES was guilty of forum shopping in
filing the petition for certiorari. Note that KOGIES motion for
reconsideration of the July 23, 1998 RTC Order which denied the
issuance of the injunctive writ had already been denied. Thus,
KOGIES only remedy was to assail the RTCs interlocutory order via a
petition for certiorari under Rule 65.While the October 2, 1998
motion for reconsideration of KOGIES of the September 21, 1998 RTC
Order relating to the inspection of things, and the allowance of
the compulsory counterclaims has not yet been resolved, the
circumstances in this case would allow an exception to the rule
that before certiorari may be availed of, the petitioner must have
filed a motion for reconsideration and said motion should have been
first resolved by the court a quo. The reason behind the rule is
"to enable the lower court, in the first instance, to pass upon and
correct its mistakes without the intervention of the higher
court."30The September 21, 1998 RTC Order directing the branch
sheriff to inspect the plant, equipment, and facilities when he is
not competent and knowledgeable on said matters is evidently flawed
and devoid of any legal support. Moreover, there is an urgent
necessity to resolve the issue on the dismantling of the facilities
and any further delay would prejudice the interests of KOGIES.
Indeed, there is real and imminent threat of irreparable
destruction or substantial damage to KOGIES equipment and
machineries. We find the resort to certiorari based on the gravely
abusive orders of the trial court sans the ruling on the October 2,
1998 motion for reconsideration to be proper.The Core Issue:
Article 15 of the ContractWe now go to the core issue of the
validity of Art. 15 of the Contract, the arbitration clause. It
provides:Article 15.Arbitration.All disputes, controversies, or
differences which may arise between the parties, out of or in
relation to or in connection with this Contract or for the breach
thereof, shall finally be settled by arbitration in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the Korean
Commercial Arbitration Board.The award rendered by the
arbitration(s) shall befinal and bindingupon both parties
concerned. (Emphasis supplied.)Petitioner claims the RTC and the CA
erred in ruling that the arbitration clause is null and
void.Petitioner is correct.Established in this jurisdiction is the
rule that the law of the place where the contract is made
governs.Lex loci contractus. The contract in this case was
perfected here in the Philippines. Therefore, our laws ought to
govern. Nonetheless, Art. 2044 of the Civil Code sanctions the
validity of mutually agreed arbitral clause or the finality and
binding effect of an arbitral award. Art. 2044 provides, "Any
stipulation that the arbitrators award or decision shall be final,
is valid, without prejudice to Articles 2038, 2039 and 2040."
(Emphasis supplied.)Arts. 2038,312039,32and 204033abovecited refer
to instances where a compromise or an arbitral award, as applied to
Art. 2044 pursuant to Art. 2043,34may be voided, rescinded, or
annulled, but these would not denigrate the finality of the
arbitral award.The arbitration clause was mutually and voluntarily
agreed upon by the parties. It has not been shown to be contrary to
any law, or against morals, good customs, public order, or public
policy. There has been no showing that the parties have not dealt
with each other on equal footing. We find no reason why the
arbitration clause should not be respected and complied with by
both parties. InGonzales v. Climax Mining Ltd.,35we held that
submission to arbitration is a contract and that a clause in a
contract providing that all matters in dispute between the parties
shall be referred to arbitration is a contract.36Again inDel Monte
Corporation-USA v. Court of Appeals, we likewise ruled that "[t]he
provision to submit to arbitration any dispute arising therefrom
and the relationship of the parties is part of that contract and is
itself a contract."37Arbitration clause not contrary to public
policyThe arbitration clause which stipulates that the arbitration
must be done in Seoul, Korea in accordance with the Commercial
Arbitration Rules of the KCAB, and that the arbitral award is final
and binding, is not contrary to public policy. This Court has
sanctioned the validity of arbitration clauses in acatenaof cases.
In the 1957 case ofEastboard Navigation Ltd. v. Juan Ysmael and
Co., Inc.,38this Court had occasion to rule that an arbitration
clause to resolve differences and breaches of mutually agreed
contractual terms is valid. InBF Corporation v. Court of Appeals,
we held that "[i]n this jurisdiction, arbitration has been held
valid and constitutional. Even before the approval on June 19, 1953
of Republic Act No. 876, this Court has countenanced the settlement
of disputes through arbitration. Republic Act No. 876 was adopted
to supplement the New Civil Codes provisions on arbitration."39And
inLM Power Engineering Corporation v. Capitol Industrial
Construction Groups, Inc., we declared that:Being an inexpensive,
speedy and amicable method of settling disputes,arbitrationalong
with mediation, conciliation and negotiationis encouraged by the
Supreme Court. Aside from unclogging judicial dockets, arbitration
also hastens the resolution of disputes, especially of the
commercial kind. It is thus regarded as the "wave of the future" in
international civil and commercial disputes. Brushing aside a
contractual agreement calling for arbitration between the parties
would be a step backward.Consistent with the above-mentioned policy
of encouraging alternative dispute resolution methods, courts
should liberally construe arbitration clauses. Provided such clause
is susceptible of an interpretation that covers the asserted
dispute, an order to arbitrate should be granted. Any doubt should
be resolved in favor of arbitration.40Having said that the instant
arbitration clause is not against public policy, we come to the
question on what governs an arbitration clause specifying that in
case of any dispute arising from the contract, an arbitral panel
will be constituted in a foreign country and the arbitration rules
of the foreign country would govern and its award shall be final
and binding.RA 9285 incorporated the UNCITRAL Model lawto which we
are a signatoryFor domestic arbitration proceedings, we have
particular agencies to arbitrate disputes arising from contractual
relations. In case a foreign arbitral body is chosen by the
parties, the arbitration rules of our domestic arbitration bodies
would not be applied. As signatory to the Arbitration Rules of the
UNCITRAL Model Law on International Commercial Arbitration41of the
United Nations Commission on International Trade Law (UNCITRAL) in
the New York Convention on June 21, 1985, the Philippines committed
itself to be bound by the Model Law. We have even incorporated the
Model Law in Republic Act No. (RA) 9285, otherwise known as the
Alternative Dispute Resolution Act of 2004 entitledAn Act to
Institutionalize the Use of an Alternative Dispute Resolution
System in the Philippines and to Establish the Office for
Alternative Dispute Resolution, and for Other Purposes, promulgated
on April 2, 2004. Secs. 19 and 20 of Chapter 4 of the Model Law are
the pertinent provisions:CHAPTER 4 - INTERNATIONAL COMMERCIAL
ARBITRATIONSEC. 19.Adoption of the Model Law on International
Commercial Arbitration.International commercial arbitration shall
be governed by the Model Law on International Commercial
Arbitration (the "Model Law") adopted by the United Nations
Commission on International Trade Law on June 21, 1985 (United
Nations Document A/40/17) and recommended for enactment by the
General Assembly in Resolution No. 40/72 approved on December 11,
1985, copy of which is hereto attached as Appendix "A".SEC.
20.Interpretation of Model Law.In interpreting the Model Law,
regard shall be had to its international origin and to the need for
uniformity in its interpretation and resort may be made to
thetravaux preparatoriesand the report of the Secretary General of
the United Nations Commission on International Trade Law dated
March 25, 1985 entitled, "International Commercial Arbitration:
Analytical Commentary on Draft Trade identified by reference number
A/CN. 9/264."While RA 9285 was passed only in 2004, it nonetheless
applies in the instant case since it is a procedural law which has
a retroactive effect. Likewise, KOGIES filed its application for
arbitration before the KCAB on July 1, 1998 and it is still pending
because no arbitral award has yet been rendered. Thus, RA 9285 is
applicable to the instant case. Well-settled is the rule that
procedural laws are construed to be applicable to actions pending
and undetermined at the time of their passage, and are deemed
retroactive in that sense and to that extent. As a general rule,
the retroactive application of procedural laws does not violate any
personal rights because no vested right has yet attached nor arisen
from them.42Among the pertinent features of RA 9285 applying and
incorporating the UNCITRAL Model Law are the following:(1) The RTC
must refer to arbitration in proper casesUnder Sec. 24, the RTC
does not have jurisdiction over disputes that are properly the
subject of arbitration pursuant to an arbitration clause, and
mandates the referral to arbitration in such cases, thus:SEC.
24.Referral to Arbitration.A court before which an action is
brought in a matter which is the subject matter of an arbitration
agreement shall, if at least one party so requests not later than
the pre-trial conference, or upon the request of both parties
thereafter, refer the parties to arbitration unless it finds that
the arbitration agreement is null and void, inoperative or
incapable of being performed.(2) Foreign arbitral awards must be
confirmed by the RTCForeign arbitral awards while mutually
stipulated by the parties in the arbitration clause to be final and
binding are not immediately enforceable or cannot be implemented
immediately. Sec. 3543of the UNCITRAL Model Law stipulates the
requirement for the arbitral award to be recognized by a competent
court for enforcement, which court under Sec. 36 of the UNCITRAL
Model Law may refuse recognition or enforcement on the grounds
provided for. RA 9285 incorporated these provisos to Secs. 42, 43,
and 44 relative to Secs. 47 and 48, thus:SEC. 42.Application of the
New York Convention.The New York Convention shall govern the
recognition and enforcement of arbitral awards covered by said
Convention.The recognition and enforcement of such arbitral awards
shall be filed with theRegional Trial Courtin accordance with the
rules of procedure to be promulgated by the Supreme Court. Said
procedural rules shall provide that the party relying on the award
or applying for its enforcement shall file with the court the
original or authenticated copy of the award and the arbitration
agreement. If the award or agreement is not made in any of the
official languages, the party shall supply a duly certified
translation thereof into any of such languages.The applicant shall
establish that the country in which foreign arbitration award was
made in party to the New York Convention.x x x xSEC. 43.Recognition
and Enforcement of Foreign Arbitral Awards Not Covered by the New
York Convention.The recognition and enforcement of foreign arbitral
awards not covered by the New York Convention shall be done in
accordance with procedural rules to be promulgated by the Supreme
Court. The Court may, on grounds of comity and reciprocity,
recognize and enforce a non-convention award as a convention
award.SEC. 44.Foreign Arbitral Award Not Foreign Judgment.A foreign
arbitral award when confirmed by a court of a foreign country,
shall be recognized and enforced as a foreign arbitral award and
not as a judgment of a foreign court.A foreign arbitral award, when
confirmed by the Regional Trial Court, shall be enforced in the
same manner as final and executory decisions of courts of law of
the Philippinesx x x xSEC. 47.Venue and Jurisdiction.Proceedings
for recognition and enforcement of an arbitration agreement or for
vacations, setting aside, correction or modification of an arbitral
award, and any application with a court for arbitration assistance
and supervision shall be deemed as special proceedings and shall be
filed with the Regional Trial Court (i) where arbitration
proceedings are conducted; (ii) where the asset to be attached or
levied upon, or the act to be enjoined is located; (iii) where any
of the parties to the dispute resides or has his place of business;
or (iv) in the National Judicial Capital Region, at the option of
the applicant.SEC. 48.Notice of Proceeding to Parties.In a special
proceeding for recognition and enforcement of an arbitral award,
the Court shall send notice to the parties at their address of
record in the arbitration, or if any part cannot be served notice
at such address, at such partys last known address. The notice
shall be sent al least fifteen (15) days before the date set for
the initial hearing of the application.It is now clear that foreign
arbitral awards when confirmed by the RTC are deemed not as a
judgment of a foreign court but as a foreign arbitral award, and
when confirmed, are enforced as final and executory decisions of
our courts of law.Thus, it can be gleaned that the concept of a
final and binding arbitral award is similar to judgments or awards
given by some of our quasi-judicial bodies, like the National Labor
Relations Commission and Mines Adjudication Board, whose final
judgments are stipulated to be final and binding, but not
immediately executory in the sense that they may still be
judicially reviewed, upon the instance of any party. Therefore, the
final foreign arbitral awards are similarly situated in that they
need first to be confirmed by the RTC.(3) The RTC has jurisdiction
to review foreign arbitral awardsSec. 42 in relation to Sec. 45 of
RA 9285 designated and vested the RTC with specific authority and
jurisdiction to set aside, reject, or vacate a foreign arbitral
award on grounds provided under Art. 34(2) of the UNCITRAL Model
Law. Secs. 42 and 45 provide:SEC. 42.Application of the New York
Convention.The New York Convention shall govern the recognition and
enforcement of arbitral awards covered by said Convention.The
recognition and enforcement of such arbitral awards shall be filed
with theRegional Trial Courtin accordance with the rules of
procedure to be promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award or applying
for its enforcement shall file with the court the original or
authenticated copy of the award and the arbitration agreement. If
the award or agreement is not made in any of the official
languages, the party shall supply a duly certified translation
thereof into any of such languages.The applicant shall establish
that the country in which foreign arbitration award was made is
party to the New York Convention.If the application for rejection
or suspension of enforcement of an award has been made, the
Regional Trial Court may, if it considers it proper, vacate its
decision and may also, on the application of the party claiming
recognition or enforcement of the award, order the party to provide
appropriate security.x x x xSEC. 45.Rejection of a Foreign Arbitral
Award.A party to a foreign arbitration proceeding may oppose an
application for recognition and enforcement of the arbitral award
in accordance with the procedures and rules to be promulgated by
the Supreme Court only on those grounds enumerated under Article V
of the New York Convention. Any other ground raised shall be
disregarded by the Regional Trial Court.Thus, while the RTC does
not have jurisdiction over disputes governed by arbitration
mutually agreed upon by the parties, still the foreign arbitral
award is subject to judicial review by the RTC which can set aside,
reject, or vacate it. In this sense, what this Court held inChung
Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable
insofar as the foreign arbitral awards, while final and binding, do
not oust courts of jurisdiction since these arbitral awards are not
absolute and without exceptions as they are still judicially
reviewable. Chapter 7 of RA 9285 has made it clear that all
arbitral awards, whether domestic or foreign, are subject to
judicial review on specific grounds provided for.(4) Grounds for
judicial review different in domestic and foreign arbitral
awardsThe differences between a final arbitral award from an
international or foreign arbitral tribunal and an award given by a
local arbitral tribunal are the specific grounds or conditions that
vest jurisdiction over our courts to review the awards.For foreign
or international arbitral awards which must first be confirmed by
the RTC, the grounds for setting aside, rejecting or vacating the
award by the RTC are provided under Art. 34(2) of the UNCITRAL
Model Law.For final domestic arbitral awards, which also need
confirmation by the RTC pursuant to Sec. 23 of RA 87644and shall be
recognized as final and executory decisions of the RTC,45they may
only be assailed before the RTC and vacated on the grounds provided
under Sec. 25 of RA 876.46(5) RTC decision of assailed foreign
arbitral award appealableSec. 46 of RA 9285 provides for an appeal
before the CA as the remedy of an aggrieved party in cases where
the RTC sets aside, rejects, vacates, modifies, or corrects an
arbitral award, thus:SEC. 46.Appeal from Court Decision or Arbitral
Awards.A decision of the Regional Trial Court confirming, vacating,
setting aside, modifying or correcting an arbitral award may be
appealed to the Court of Appeals in accordance with the rules and
procedure to be promulgated by the Supreme Court.The losing party
who appeals from the judgment of the court confirming an arbitral
award shall be required by the appellate court to post a
counterbond executed in favor of the prevailing party equal to the
amount of the award in accordance with the rules to be promulgated
by the Supreme Court.Thereafter, the CA decision may further be
appealed or reviewed before this Court through a petition for
review under Rule 45 of the Rules of Court.PGSMC has remedies to
protect its interestsThus, based on the foregoing features of RA
9285, PGSMC must submit to the foreign arbitration as it bound
itself through the subject contract. While it may have misgivings
on the foreign arbitration done in Korea by the KCAB, it has
available remedies under RA 9285. Its interests are duly protected
by the law which requires that the arbitral award that may be
rendered by KCAB must be confirmed here by the RTC before it can be
enforced.With our disquisition above, petitioner is correct in its
contention that an arbitration clause, stipulating that the
arbitral award is final and binding, does not oust our courts of
jurisdiction as the international arbitral award, the award of
which is not absolute and without exceptions, is still judicially
reviewable under certain conditions provided for by the UNCITRAL
Model Law on ICA as applied and incorporated in RA 9285.Finally, it
must be noted that there is nothing in the subject Contract which
provides that the parties may dispense with the arbitration
clause.Unilateral rescission improper and illegalHaving ruled that
the arbitration clause of the subject contract is valid and binding
on the parties, and not contrary to public policy; consequently,
being bound to the contract of arbitration, a party may not
unilaterally rescind or terminate the contract for whatever cause
without first resorting to arbitration.What this Court held
inUniversity of the Philippines v. De Los Angeles47and reiterated
in succeeding cases,48that the act of treating a contract as
rescinded on account of infractions by the other contracting party
is valid albeit provisional as it can be judicially assailed, is
not applicable to the instant case on account of a valid
stipulation on arbitration. Where an arbitration clause in a
contract is availing, neither of the parties can unilaterally treat
the contract as rescinded since whatever infractions or breaches by
a party or differences arising from the contract must be brought
first and resolved by arbitration, and not through an extrajudicial
rescission or judicial action.The issues arising from the contract
between PGSMC and KOGIES on whether the equipment and machineries
delivered and installed were properly installed and operational in
the plant in Carmona, Cavite; the ownership of equipment and
payment of the contract price; and whether there was substantial
compliance by KOGIES in the production of the samples, given the
alleged fact that PGSMC could not supply the raw materials required
to produce the sample LPG cylinders, are matters proper for
arbitration. Indeed, we note that on July 1, 1998, KOGIES
instituted an Application for Arbitration before the KCAB in Seoul,
Korea pursuant to Art. 15 of the Contract as amended. Thus, it is
incumbent upon PGSMC to abide by its commitment to
arbitrate.Corollarily, the trial court gravely abused its
discretion in granting PGSMCs Motion for Inspection of Things on
September 21, 1998, as the subject matter of the motion is under
the primary jurisdiction of the mutually agreed arbitral body, the
KCAB in Korea.In addition, whatever findings and conclusions made
by the RTC Branch Sheriff from the inspection made on October 28,
1998, as ordered by the trial court on October 19, 1998, is of no
worth as said Sheriff is not technically competent to ascertain the
actual status of the equipment and machineries as installed in the
plant.For these reasons, the September 21, 1998 and October 19,
1998 RTC Orders pertaining to the grant of the inspection of the
equipment and machineries have to be recalled and nullified.Issue
on ownership of plant proper for arbitrationPetitioner assails the
CA ruling that the issue petitioner raised on whether the total
contract price of USD 1,530,000 was for the whole plant and its
installation is beyond the ambit of a Petition for
Certiorari.Petitioners position is untenable.It is settled that
questions of fact cannot be raised in an original action for
certiorari.49Whether or not there was full payment for the
machineries and equipment and installation is indeed a factual
issue prohibited by Rule 65.However, what appears to constitute a
grave abuse of discretion is the order of the RTC in resolving the
issue on the ownership of the plant when it is the arbitral body
(KCAB) and not the RTC which has jurisdiction and authority over
the said issue. The RTCs determination of such factual issue
constitutes grave abuse of discretion and must be reversed and set
aside.RTC has interim jurisdiction to protect the rights of the
partiesAnent the July 23, 1998 Order denying the issuance of the
injunctive writ paving the way for PGSMC to dismantle and transfer
the equipment and machineries, we find it to be in order
considering the factual milieu of the instant case.Firstly, while
the issue of the proper installation of the equipment and
machineries might well be under the primary jurisdiction of the
arbitral body to decide, yet the RTC under Sec. 28 of RA 9285 has
jurisdiction to hear and grant interim measures to protect vested
rights of the parties. Sec. 28 pertinently provides:SEC. 28.Grant
of interim Measure of Protection.(a)It is not incompatible with an
arbitration agreement for a party to request, before constitution
of the tribunal, from a Court to grant such measure. After
constitution of the arbitral tribunal and during arbitral
proceedings, a request for an interim measure of protection, or
modification thereof, may be made with the arbitralor to the extent
that the arbitral tribunal has no power to act or is unable to act
effectivity, the request may be made with the Court. The arbitral
tribunal is deemed constituted when the sole arbitrator or the
third arbitrator, who has been nominated, has accepted the
nomination and written communication of said nomination and
acceptance has been received by the party making the request.(b)
The following rules on interim or provisional relief shall be
observed:Any party may request that provisional relief be granted
against the adverse party.Such relief may be granted:(i)to prevent
irreparable loss or injury;(ii) to provide security for the
performance of any obligation;(iii) to produce or preserve any
evidence; or(iv) to compel any other appropriate act or
omission.(c) The order granting provisional relief may be
conditioned upon the provision of security or any act or omission
specified in the order.(d) Interim or provisional relief is
requested by written application transmitted by reasonable means to
the Court or arbitral tribunal as the case may be and the party
against whom the relief is sought, describing in appropriate detail
the precise relief, the party against whom the relief is requested,
the grounds for the relief, and the evidence supporting the
request.(e)The order shall be binding upon the parties.(f) Either
party may apply with the Court for assistance in implementing or
enforcing an interim measure ordered by an arbitral tribunal.(g) A
party who does not comply with the order shall be liable for all
damages resulting from noncompliance, including all expenses, and
reasonable attorney's fees, paid in obtaining the orders judicial
enforcement. (Emphasis ours.)Art. 17(2) of the UNCITRAL Model Law
on ICA defines an "interim measure" of protection as:Article 17.
Power of arbitral tribunal to order interim measuresxxx xxx xxx(2)
Aninterim measureis anytemporary measure, whether in the form of an
award or in another form, by which, at any time prior to the
issuance of the award by which the dispute is finally decided, the
arbitral tribunal orders a party to:(a)Maintain or restore the
status quo pending determination of the dispute;(b)Take action that
would prevent, or refrain from taking action that is likely to
cause, current or imminent harm or prejudice to the arbitral
process itself;(c)Provide a means of preserving assets out of which
a subsequent award may be satisfied; or(d)Preserve evidence that
may be relevant and material to the resolution of the dispute.Art.
17 J of UNCITRAL Model Law on ICA also grants courts power and
jurisdiction to issue interim measures:Article 17 J. Court-ordered
interim measuresA court shall have the same power of issuing an
interim measure in relation to arbitration proceedings,
irrespective of whether their place is in the territory of this
State, as it has in relation to proceedings in courts. The court
shall exercise such power in accordance with its own procedures in
consideration of the specific features of international
arbitration.In the recent 2006 case ofTransfield Philippines, Inc.
v. Luzon Hydro Corporation, we were explicit that even "the
pendency of an arbitral proceeding does not foreclose resort to the
courts for provisional reliefs." We explicated this way:As a
fundamental point, the pendency of arbitral proceedings does not
foreclose resort to the courts for provisional reliefs. The Rules
of the ICC, which governs the parties arbitral dispute, allows the
application of a party to a judicial authority for interim or
conservatory measures. Likewise, Section 14 of Republic Act (R.A.)
No. 876 (The Arbitration Law) recognizes the rights of any party to
petition the court to take measures to safeguard and/or conserve
any matter which is the subject of the dispute in arbitration. In
addition, R.A. 9285, otherwise known as the "Alternative Dispute
Resolution Act of 2004," allows the filing of provisional or
interim measures with the regular courts whenever the arbitral
tribunal has no power to act or to act effectively.50It is thus
beyond cavil that the RTC has authority and jurisdiction to grant
interim measures of protection.Secondly, considering that the
equipment and machineries are in the possession of PGSMC, it has
the right to protect and preserve the equipment and machineries in
the best way it can. Considering that the LPG plant was
non-operational, PGSMC has the right to dismantle and transfer the
equipment and machineries either for their protection and
preservation or for the better way to make good use of them which
is ineluctably within the management discretion of PGSMC.Thirdly,
and of greater import is the reason that maintaining the equipment
and machineries in Worths property is not to the best interest of
PGSMC due to the prohibitive rent while the LPG plant as set-up is
not operational. PGSMC was losing PhP322,560 as monthly rentals or
PhP3.87M for 1998 alone without considering the 10% annual rent
increment in maintaining the plant.Fourthly, and corollarily, while
the KCAB can rule on motions or petitions relating to the
preservation or transfer of the equipment and machineries as an
interim measure, yet on hindsight, the July 23, 1998 Order of the
RTC allowing the transfer of the equipment and machineries given
the non-recognition by the lower courts of the arbitral clause, has
accorded an interim measure of protection to PGSMC which would
otherwise been irreparably damaged.Fifth, KOGIES is not unjustly
prejudiced as it has already been paidasubstantial amount based on
the contract. Moreover,KOGIES is amply protected by the arbitral
action it has instituted before the KCAB, the award of which can be
enforced in our jurisdiction through the RTC. Besides, by our
decision, PGSMC is compelled to submit to arbitration pursuant to
the valid arbitration clause of its contract with KOGIES.PGSMC to
preserve the subject equipment and machineriesFinally, while PGSMC
may have been granted the right to dismantle and transfer the
subject equipment and machineries, it does not have the right to
convey or dispose of the same considering the pending arbitral
proceedings to settle the differences of the parties. PGSMC
therefore must preserve and maintain the subject equipment and
machineries with the diligence of a good father of a family51until
final resolution of the arbitral proceedings and enforcement of the
award, if any.WHEREFORE, this petition isPARTLY GRANTED, in
that:(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249
isREVERSEDandSET ASIDE;(2) The September 21, 1998 and October 19,
1998 RTC Orders in Civil Case No. 98-117 areREVERSEDandSET
ASIDE;(3) The parties are herebyORDEREDto submit themselves to the
arbitration of their dispute and differences arising from the
subject Contract before the KCAB; and(4) PGSMC is herebyALLOWEDto
dismantle and transfer the equipment and machineries, if it had not
done so, andORDEREDto preserve and maintain them until the finality
of whatever arbitral award is given in the arbitration
proceedings.No pronouncement as to costs.SO ORDERED.
FIRST DIVISIONG.R. No. 150241 November 4, 2004EDUARDO S.
MERCADO, herein represented by his counsel, ATTY. ENRICO M.
UYEHARA,petitioner,vs.THE COURT OF APPEALS, the Honorable LETICIA
P. MORALES, in her capacity as Presiding Judge of Branch 140 of the
Regional Trial Court of Makati City, ESTATE OF CONCEPCION CLAUDIO
GATMAITAN, CARMELIE C. GATMAITAN and ARMANDO V.
GATMAITAN,respondents.
QUISUMBING,J.:This special civil action for certiorari seeks to
annul the Court of Appeals Resolutions dated February 23, 20011and
July 31, 2001,2in CA-G.R. SP No. 62678, dismissing Eduardo S.
Mercados petition for certiorari for late payment of docket fees
and denying his Motion for Reconsideration.The facts and antecedent
proceedings, as culled from records, are as follows:On various
dates from January to August 1988, private respondent Armando V.
Gatmaitan obtained a series of loans from petitioner Eduardo S.
Mercado totaling P850,000, to renovate and repair two houses
located at 1827 Santan St., Dasmarias Village, Makati City. Said
houses were the conjugal properties of Armando and Concepcion
Gatmaitan. The loan agreement was in writing.The agreement
stipulated that Armando was to lease the aforementioned houses and
deliver all the rentals collected to Eduardo. Despite repeated
demands, Armando did not pay any amount to Eduardo.Sometime in
1989, Eduardo learned that Concepcion had filed a Complaint
docketed as Civil Case No. 89-4506 against Armando for the
separation and liquidation of their conjugal properties before the
Regional Trial Court (RTC) of Makati City, Branch 149.3Eduardo
immediately filed a Motion for Leave to File Complaint in
Intervention, claiming that he had an interest as a creditor in the
unpaid loans he extended to Armando for the renovation of the
conjugal properties subject of said civil case.For failure to file
his Answer, Armando was declared in default and Concepcion was
allowed to present evidence ex parte. Petitioner then filed a
Manifestation and Motion praying that the trial court hold in
abeyance the resolution of the case pending resolution of his
Motion for Leave to File Complaint in Intervention. Meanwhile,
Armando moved to lift the Order of Default and sought to have his
Answer admitted.In two separate Orders, both dated February 19,
1990, the trial court denied Armandos Motion to Lift Order of
Default and Motion for Admission of Answer as well as petitioners
Motion for Leave to File Complaint in Intervention.4However,
Eduardo allegedly did not immediately learn of the denial of his
motion to intervene.On January 7, 1994, the trial court handed down
its Decision in Civil Case No. 89-4506. Again, Eduardo allegedly
had no knowledge about the judgment or the subsequent appeal of
said ruling.On February 22, 1999, Eduardo, thru a different
counsel, filed a Motion for Early Resolution of the Motion for
Leave to File Complaint in Intervention, which was raffled to
Branch 140 of the Makati City RTC. During the hearing of the
motion, the trial court informed Eduardo that a Decision had
already been rendered in Civil Case No. 89-4506 by Branch 149 and
the appeal from said judgment had already been resolved by the
Court of Appeals. Nonetheless, it directed the parties to file
their respective position papers. Concepcion filed an Opposition
with Motion for Issuance of Writ of Execution but she died on May
15, 1999, before her motion could be resolved.In an Order5dated
September 27, 1999, Branch 140, denied Eduardos motion for want of
merit, pointing out that his Motion for Leave to File Complaint in
Intervention had been dismissed previously by Branch 149 in its
Order dated February 19, 1990, without any Motion for
Reconsideration being filed from the aforesaid order of
dismissal.On September 30, 1999, the trial court granted the Motion
for Writ of Execution.Eduardo moved for reconsideration but this
was denied on October 27, 1999. He then filed a Petition for Relief
dated January 30, 2000, raising denial of due process and fraud as
his grounds since he allegedly never received a copy of the Order
of September 19, 1990, thus preventing him from moving for
reconsideration. In paragraphs 14 and 15 of the Petition for
Relief, however, petitioner admits he did receive an Order dated
February 19, 1990.In an Order dated April 6, 2000, the Regional
Trial Court of Makati City, Branch 140, ruled on the petition, as
follows:Finding no cogent reasons to reverse or set aside the
[O]rders dated September 27, 1999 and October 27, 1999, the
petition for relief filed by petitioner-intervenor Eduardo S.
Mercado praying that he be allowed to file complaint in
intervention is hereby DENIED.SO ORDERED.6On May 18, 2000,
petitioner moved for reconsideration of the foregoing Order but
this was denied in an Order dated September 26, 2000, a copy of
which was received by petitioner on November 17, 2000.Petitioner
then filed a petition for certiorari with the Court of Appeals,
which was dismissed for lack of jurisdiction due to late payment of
docket fees. The appellate court found that while Eduardo filed his
petition for certiorari by registered mail on January 16, 2001, the
sixtieth (60th) day from the receipt of the Order of Denial of
Motion for Reconsideration, the docket and other lawful fees were
paid only on January 17, 2001, one day after the expiration of the
reglementary period for filing his petition. The Court of Appeals
applied Rule 46, Section 3 of the 1997 Rules of Civil
Procedure7which allows payment of docket fees within a reasonable
time if it was not paid during the filing of the initiatory
pleading, but in no case beyond the applicable prescriptive period.
It held that while the rule on the payment of docket fees may be
liberally construed if only to secure a just and speedy disposition
of every action and proceeding, nonetheless, it should not be
ignored or belittled, lest it scathes and prejudices the other
partys substantive rights.8Petitioner then filed a Motion for
Reconsideration but was denied.Dissatisfied, petitioner now comes
to this Court on the grounds that:1. THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DISMISSED THE PETITION, SOLELY ON PROCEDURAL
GROUNDS.2. PETITIONER HAS A GOOD AND MERITORIOUS CAUSE OF ACTION AS
THE PUBLIC RESPONDENT REGIONAL TRIAL COURT, BRANCH 140, MAKATI CITY
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DENIED THE PETITION FOR RELIEF FILED BY THE
HEREIN PETITIONER.9Petitioners arguments lack persuasiveness. It
bears stressing that this case must be dismissed outright as the
petitioner adopted the wrong remedy in bringing this case before
this Court. Petitioner should have filed a petition for review
under Rule 45 of the 1997 Rules of Civil Procedure instead of a
special civil action for certiorari under Rule 65. The proper
remedy of a party aggrieved by a decision of the Court of Appeals
is a petition for review under Rule 45, which is not identical to a
petition for certiorari under Rule 65. Under Rule 45, decisions,
final orders or resolutions of the Court of Appeals in any case,
i.e., regardless of the nature of the action or proceedings
involved, may be appealed to us by filing a petition for review,
which would be but a continuation of the appellate process over the
original case. On the other hand, a special civil action under Rule
65 is an independent action based on the specific grounds therein
provided and, as a general rule, cannot be availed of as a
substitute for the lost remedy of an ordinary appeal, including
that to be taken under Rule 45. Accordingly, when a party adopts an
improper remedy, as in this case, his petition may be dismissed
outright.10Petitioner should have availed of the ordinary appeal
process such as a petition for review under Rule 45, within 15 days
after notice of denial of his Motion for Reconsideration.
Undoubtedly, petitioner had already lost this remedy when he filed
this special civil action on January 16, 2001. A Petition for
Certiorari cannot be a substitute for the lost or lapsed remedy of
appeal, where such loss is occasioned by the petitioners own
neglect or error in the choice of remedies.11By his own account,
petitioner received the Order denying the Motion for
Reconsideration from the RTC on November 17, 2000. Instead of
filing a petition for review with the appellate court within 15
days thereof or until December 2, 2000, he filed a petition for
certiorari by registered mail on January 16, 2001, but belatedly
made the payment of docket fees only on January 17, 2001.
Noteworthy, petitioner did not even attempt to explain why he was
unable to file a petition for review within the reglementary
period.Indeed, not infrequently, litigants and parties to a
petition have invoked liberal construction of the Rules of Court to
justify lapses in its observance. Hopefully, it is not simply a
cover-up of their own neglect or sheer ignorance of procedure.
While indeed this Court has on occasion set aside procedural
irregularities in the interest of justice, it must be stressed that
liberality of construction of the rules should not be a panacea for
all procedural maladies. For this Court will not tolerate wanton
disregard of the procedural rules under the guise of liberal
construction.In any event, even if we were to disregard the
procedural defects, we find that this petition must still be
dismissed as the appellate court did not commit any grave abuse of
discretion amounting to want or excess of jurisdiction in
dismissing the petition for late payment of filing fees. Petitioner
undeniably paid his docket fees beyond the reglementary period of
60 days for filing a petition for certiorari. Well settled is the
rule that the court cannot acquire jurisdiction over the subject
matter of a case, unless the docket fees are paid.12And where the
filing of the initiatory pleading is not accompanied by payment of
the docket fees, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable prescriptive
or reglementary period.13Thus, the Court of Appeals correctly
dismissed the petition for certiorari pursuant to Rule 46, Section
314in relation to Rule 65, Section 6 (2)15of the 1997 Rules of
Civil Procedure.WHEREFORE, the instant petition is DISMISSED for
lack of merit. The assailed Resolutions dated February 23, 2001 and
July 31, 2001 of the Court of Appeals are hereby AFFIRMED.SO
ORDERED.
SECOND DIVISIONG.R. No. 138031 May 27, 2004ANTONIO NAVARRO and
GRAHMMS, INC.,petitioners,vs.METROPOLITAN BANK & TRUST COMPANY,
THE HON. COURT OF APPEALS, and THE HON. ZEUS C. ABROGAR (Presiding
Judge of the Regional Trial Court of Makati City, Branch
150),respondents.D E C I S I O NCALLEJO, SR.,J.:This is a petition
for review oncertiorariunder Rule 45 of the Rules of Court, as
amended, assailing the Decision1of the Court of Appeals, which
affirmed the denial by the Regional Trial Court of Makati City,
Branch 150, in Civil Case No. 94-2913, of the petitioners' appeal
for non-payment of docket fees, as well as the appellate court's
March 29, 1999 Resolution which denied the petitioners' motion for
reconsideration.The facts are undisputed:On November 3, 1994, the
private respondent Metropolitan Bank and Trust Company (respondent
MBTC) filed with the RTC of Makati City a petition for the judicial
foreclosure of the real estate mortgage executed by the petitioners
in its favor.2The case was docketed as Civil Case No. 94-2913 and
was raffled to Branch 150 of the same court.After due proceedings,
the RTC rendered judgment on January 16, 1998,3the dispositive
portion of which reads:WHEREFORE, the court hereby grants the right
of the plaintiff bank to foreclose the properties belonging to
defendant Antonio Navarro covered by TCT Nos. 155256, 155257,
155258 particularly described as follows:to be sold at public
auction the proceeds of which to be applied in payment of
theP3,500,000.00 loan, plus interest and penalty charges until
fully paid. In case of deficiency on the proceeds of the aforesaid
sale, execution on the defendant's property shall be implemented.
Likewise, 10% of the total amount due shall be awarded as
attorney's fees.4The petitioners received a copy of the Decision on
February 10, 1998 and on February 18, 1998 filed a Motion for
Reconsideration of the decision.5On March 25, 1998, the trial court
issued an Order denying the said motion.6The petitioners received
their copy of the order on April 7, 1998.On April 14, 1998, the
last day of the reglementary period, the petitioners filed with the
RTC a Notice of Appeal7from its January 16, 1998 Decision and March
25, 1998 Order. However, the petitioners failed to pay the
requisite docket and other lawful fees.On April 21, 1998, the
respondent MBTC filed a Motion to Deny Due Course to Notice of
Appeal with Motion for Execution8on the ground that the notice of
appeal was not timely filed. Acting on the motion, the RTC, while
ruling in favor of the timeliness of the petitioners' notice of
appeal, nevertheless denied the appeal for not being accompanied by
the required docket fees. Hence, in its Order dated May 27,
1998,9the RTC granted the motion of the respondents for the
issuance of a writ of execution for the enforcement of the
decision. The RTC held that: From the sequence of dates and events,
it is clear that defendants filed their Notice of Appeal within the
reglementary period from the date of their receipt of the denial of
their motion for reconsideration since they had still seven days
left to file an appeal. However, since Section 4, Rule 41 of the
New Rules of Civil Procedure, states that:"Within the period for
taking an appeal, the appellant shall pay to the clerk of court
which rendered the judgment or final order appealed from, the full
amount of the appellate court docket and other lawful fees. Proof
of payment of said fees shall be transmitted to the appellate court
together with the original record or the record on appeal."It is
also incumbent upon the appellants to pay the required appeal fee
within the reglementary period. Up to the present, the court has
not yet received any evidence of payment of the appellate docket
fee to be attached to the record of this case, in accordance with
the New Rules, to the prejudice of the other party.Wherefore, from
the foregoing, the notice of appeal is hereby DENIED for not being
accompanied by the required docket fees, and let a writ of
execution be issued for the enforcement of the decision.On June 2,
1998, the RTC correspondingly issued the Writ of Execution10prayed
for by the respondent MBTC.On June 11, 1998, the counsel for the
petitioners informed the court by letter that on June 9, 1998, he
sent his messenger to the court to pay the docket fees on the
notice of appeal but was refused by the receiving clerk.11In a
Letter-Response dated June 19, 1998, the trial court instructed the
counsel for the petitioners, to wit:In response to your letter
dated June 11, 1998, please be informed that as a matter of policy,
courts do not receive payments of docket fees. This should be made
to the Office of the Clerk of Court, with only the official
receipts and/or proofs of payment filed in court to be attached to
the record of the case to be forwarded to the Court of Appeals.
Moreover, the court has already resolved all pending incidents
before it, the last one in its Order dated May 27, 1998 so that, if
the receiving clerk refused receipt of the docket fee on the nature
(sic) of appeal, it is only in consonance with the above-mentioned
order.12On June 29, 1998, the petitioner filed with the CA a
petition forcertiorariassailing the May 27, 1998 Order of the RTC
for having been issued with grave abuse of discretion amounting to
lack or excess of jurisdiction.13In their reply to the comment, the
petitioners, for the first time, proffered to the appellate court
an explanation for their admitted failure to pay the appellate
docket fees within the prescribed reglementary period. The
petitioners, thus, averred:6. Petitioners' failure to pay the
appellate docket fee is not without a valid explanation. At the
time of the filing of Notice of Appeal, petitioners' counsel's lone
secretary, without informing in advance the undersigned, decided to
migrate to another country for "greener pasture," leaving the
undersigned the responsibility to tend to all the cases in his
office. The undersigned's operation was literally disabled and in
shambles;7. Thus, when the undersigned discovered this
inadvertence, he immediately tried to remedy the situation and can
only hope that this Honorable Court can understand the
undersigned's predicament.14On September 30, 1998, the CA
promulgated its Decision dismissing the petitioner's appeal.15The
petitioner's motion for reconsideration16and its
supplement17thereto was, likewise, denied by the appellate court in
its Resolution dated March 29, 1999.18Hence, the petition at
bar.The petitioners assail the decision of the CA grounded on the
following:A. THE APPEAL OF PETITIONER WAS DULY AND SEASONABLY
PERFECTED; HENCE, THE HON. CA ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN RENDERING THE ASSAILED
DECISION (ANNEX "M") THAT SUSTAINED THE ORDER OF THE RTC DENYING,
DISALLOWING AND DISMISSING THE APPEAL;B. THE ORDER [OF THE RTC]
DIRECTING THE EXECUTION OF ITS JUDGMENT [BEFORE THE EXPIRY OF THE
90-DAY PERIOD FROM RECEIPT THEREOF BY THE PETITIONERS] IS
PREMATURE, BECAUSE (1) THE COURT HAD LOST JURISDICTION OVER THE
CASE UPON THE FILING OF THE NOTICE OF APPEAL AND (2) RULE 68
PROVIDES FOR THE PROCEDURE HOW TO ENFORCE A JUDGMENT IN A PETITION
FOR FORECLOSURE;C. THE HONORABLE COURT OF APPEALS ERRED IN
SUSTAINING THE ORDER OF THE RTC THAT DISMISSED THE THIRD-PARTY
COMPLAINT OF PETITIONER NAVARRO AGAINST THE ERRANT AND FRAUDULENT
BRANCH MANAGER DANILO MENESES OF RESPONDENT METROBANK;D. THE
JUDGMENT BINDING THE CONJUGAL PROPERTY OF SPOUSES CLARITA PARAGAS
AND ANTONIO NAVARRO ON THE ALLEGED DEBT OF THE HUSBAND IS AGAINST
THE LAW;19The petition is denied due course.The petitioners contend
that the appellate court erred in sustaining the RTC's denial of
their notice of appeal on the ground of their failure to pay the
docket and other legal fees. The petitioners aver that the payment
of the said fees is not a prerequisite for the perfection of an
appeal. They contend that having seasonably filed their notice of
appeal from the RTC's January 16, 1998 Decision and March 25, 1998
Order, the appeal therefrom was deemed perfected; thus, divesting
the RTC of jurisdiction over the case. Hence, when the RTC issued
its March 25, 1998 Order, it had no jurisdiction to do so. The
petitioners cited the rulings of this Court inSantos v. Court of
Appeals20and inManila Mandarin Employees Union v. NLRC21to bolster
its stance.We are not convinced. Time and time again, this Court
has consistently held that the "payment of docket fees within the
prescribed period is mandatory for the perfection of an appeal.
Without such payment, the appeal is not perfected. The appellate
court does not acquire jurisdiction over the subject matter of the
action and the decision sought to be appealed from becomes final
and executory."22It bears stressing that appeal is not a right, but
a mere statutory privilege.23Corollary to this principle is that
the appeal must be exercised strictly in accordance with the
provisions set by law. Rule 41 of the Rules of Court provides that
an appeal to the CA from a case decided by the RTC in the exercise
of the latter's original jurisdiction shall be taken within fifteen
(15) days from the notice of judgment or final order appealed from.
Such appeal is perfected by filing a notice of appeal thereof with
the court that rendered the judgment or final order and, by serving
a copy of that notice upon the adverse party,24and by paying within
this same period the full amount of the appellate court docket and
other lawful fees to the clerk of court.25The payment of the docket
fees within this period is a condition sine qua non to the
perfection of the appeal. Contrary to the petitioners' predication,
the payment of the appellate docket and other lawful fees is not a
mere technicality of law or procedure. It is an essential
requirement, without which the decision or final order appealed
from would become final and executory as if no appeal was filed at
all.We have consistently ruled that litigation is not a game of
technicalities and that every case must be prosecuted in accordance
with the prescribed procedure so that issues may be properly
presented and justly resolved.26However, we have also ruled that
rules of procedure must be faithfully followed except only when,
for persuasive and weighting reasons, they may be relaxed to
relieve a litigant of an injustice commensurate with his failure to
comply with the prescribed procedure. Concomitant to a liberal
interpretation of the rules of procedure should be an effort on the
part of the party invoking liberality to adequately explain his
failure to abide by the rules.27Our ruling in this case is not
antithetical to our ruling in La Salette College v. Victor
Pilotin,28viz:Notwithstanding the mandatory nature of the
requirement of payment of appellate docket fees, we also recognize
that its strict application is qualified by the following: first,
failure to pay those fees within the reglementary period allows
only discretionary, not automatic, dismissal; second, such power
should be used by the court in conjunction with its exercise of
sound discretion in accordance with the tenets of justice and fair
play, as well as with a great deal of circumspection in
consideration of all attendant circumstances.In Mactan Cebu
International Airport Authority v. Mangubat, the payment of the
docket fees was delayed by six (6) days, but the late payment was
accepted, because the party showed willingness to abide by the
Rules by immediately paying those fees. Yambao v. Court of Appeals,
saw us again relaxing the Rules when we declared therein that "the
appellate court may extend the time for the payment of the docket
fees if appellant is able to show that there is a justifiable
reason for the failure to pay the correct amount of docket fees
within the prescribed period, like fraud, accident, mistake,
excusable negligence, or a similar supervening casualty, without
fault on the part of the appellant."In the present case, the
petitioners failed to establish any sufficient and satisfactory
reason to warrant a relaxation of the mandatory rule on the payment
of appellate docket and other lawful fees. The explanation given by
the petitioners' counsel for the non-payment was that his
secretary, who migrated to another country, inadvertently failed to
pay the docket and other fees when she filed the petitioners'
notice of appeal with the court. The said counsel came to know of
the inadvertence only when he received a copy of the RTC's May 27,
1998 Order which denied due course to the appeal for failure to pay
the required docket