Philippine National Bank v. Deang
REITERATIONFacts
The Antecedents: Respondents Deang Marketing Corporation and Berlita Deang filed a Complaint against petitioner Philippine National Bank (PNB) for reformation of contract and specific performance, alleging that a dacion en pago arrangement in a Consolidation and Restructuring Agreement transformed their outstanding loan obligations into a 7-year term loan. Procedural History: Summons was served on PNB on April 20, 2006. On May 15, 2006, respondents filed a Motion to Declare PNB in Default. On the same day, PNB filed a Motion for Extension of Time to File Answer, dated May 5, 2006, seeking 30 days up to June 11, 2006. On May 16, 2006, the RTC issued an Order denying the Motion to Declare PNB in Default and granting PNB's Motion for Extension. Respondents filed a Motion for Reconsideration. PNB filed its Answer on May 25, 2006. The RTC, by Order of August 9, 2006, denied respondents' Motion for Reconsideration. Respondents assailed the RTC Orders via certiorari to the Court of Appeals. The Petition: The Court of Appeals, by Decision of February 26, 2007, annulled and set aside the RTC Orders, declared PNB in default, and ordered its Answer expunged from the records. PNB's Motion for Reconsideration was denied by Resolution of May 16, 2007. Hence, the present Petition for Review.
Issue(s)
Whether the Court of Appeals erred in declaring petitioner in default and ordering its Answer expunged from the records. Whether the Court of Appeals erred in annulling and setting aside the Orders dated May 16, 2006 and August 9, 2006 of the RTC.
Ruling
The petition is denied. The Court of Appeals did not err in declaring petitioner in default and ordering its Answer expunged from the records, and in annulling and setting aside the RTC Orders.
Ratio Decidendi
On the issue of declaring petitioner in default and expunging its Answer: The Court held that petitioner's Motion for Extension of Time to File Answer was filed out of time. The reglementary period for PNB to file an Answer was until May 5, 2006. The Motion for Extension, though dated May 5, 2006, was transmitted via private courier on May 14, 2006, and received by the trial court on May 15, 2006, ten days late. It is a basic rule of remedial law that a motion for extension must be filed before the expiration of the period sought to be extended; otherwise, the court loses its discretion to grant it. The Court found that PNB was not candid in its motion, making it appear timely filed when it was not. The Court also noted that PNB's counsel had prior knowledge of the case due to notarizing the complaint's verification and certificate, making the claim of heavy workload and inadvertence less credible. The use of a private courier was also deemed an attempt to obscure the late filing. The Court emphasized that while procedural rules should be liberally construed to achieve substantial justice, this does not mean they can be ignored at will, especially when the delay is inexcusable and accompanied by deceptive practices. On the issue of annulling and setting aside the RTC Orders: The Court found that the RTC erred in granting PNB's Motion for Extension when it was filed out of time. The RTC's inclination to reconsider or lift an order of default, as stated in its denial of respondents' Motion for Reconsideration, preempted orderly procedure and showed a slant towards PNB's arguments before they were fully presented. The Court distinguished the present case from Indiana Aerospace University v. Comm. on Higher Educ., where the Answer was filed before the declaration of default. Here, the Answer was filed after the hearing on the Motion to Declare Default would have occurred. The Court also distinguished it from Sps. Ampeloquio, Sr. v. Court of Appeals, where justification for belated action was provided. In this case, no satisfactory reason was given for the tardiness, and the intention to delay was apparent. The Court concluded that PNB's negligence was inexcusable, and the circumstances surrounding the delay were detestable, warranting the upholding of procedural rules.
Main Doctrine
A motion for extension of time to file a pleading must be filed before the expiration of the period sought to be extended; otherwise, the court loses its discretion to entertain or grant it. The liberal application of procedural rules does not permit the disregard of mandatory periods, especially when the delay is inexcusable and accompanied by deceptive moves.